Solar Energy Cost vs. Coal Cost

Solar panels are more costly than coal.

Solar energy systems are becoming more common as the United States seeks to break away from fossil fuels. But it only makes up a small share of the nation's energy supply. According to the U.S. Energy Information Administration, coal generated about 45 percent of the nation's energy in 2010, while alternative forms of energy, such as solar and wind, were less than 4.2 percent. Cost is one of the factors.

Solar vs. Coal Costs

According to the U.S. Energy Information Administration, the average price of coal in September 2010 was $2.27 per million British Thermal Units (Btu), or 0.008 per kilowatt hour (kWh) when converted. Comparatively, Solarbuzz's January 2011 Global Benchmark Price Indices showed a home solar panel system costing about 31.63 cents per kWh in a sunny climate (average of 5.5 hours per day of sunlight) and 65.98 cents per kWh in a cloudy climate (average of 2.5 hours per day).

Reasons for the Differences

Solar energy costs more to produce. It costs approximately $7 to $10 per watt to install a solar system, with the panels themselves accounting for much of that cost.

Reducing Solar Costs

The costs of solar energy improve when utility rebates and government tax incentives are included. Solarbuzz includes the cost of financing the system in its calculations and notes that incentives would bring down the price per kilowatt hour.

References

• U.S. Energy Information Administration: Electric Power Monthly December 2010
• Solarbuzz:Solar Electricity Benchmark Price Indices
• Green Econometrics: Understanding the Cost of Solar Energy
• University of Rochester Distinct Energy: Miscellaneous Energy & Power Conversions for Energy Engineers