The economic slowdown caused by the continual lockdowns due to the pandemic have been severe. However, now as things are gradually returning back to “normal” the economy is bouncing back. The rebound caught many people off guard, causing shortages and price rises across an array of industries. The prices for solar power systems are no exception to this increase in price.
It looks like demand from solar farms has pushed up prices of solar panels with 12-15 year product warranties. There’s no matching boom in residential installations, so prices of residential-only panels with longer warranties have not increased by much.
Solar panel prices have increased unevenly over the last few months. The wholesale prices of reliable, lower-cost panels with 12 to 15 year product warranties have roughly doubled from their lows of two years ago, but the cost of higher quality solar panels with 25 year product warranties — nearly all of which go on residential roofs — have held steady.
It is important to note that if you were planning on installing a solar power system, it is not recommended to hold off purchasing solar in the hope that solar prices will fall because of the following reasons:
- Solar panels with a 25 year product warranty have not seen the jump in price like the ones with a 12-15 year warranty. Installing solar panels with a 25 year product warranty is a wiser choice anyway.
- A 10 kilowatt solar power system can provide $1,000 in savings and credit on electricity bills in under six months. This means you stand to lose a lot more than you can gain by waiting for solar prices to fall.
Reason for increase in solar panel prices
As the world aims to recover from the pandemic, factories around the world are scrambling for workers and raw materials. The high demand and competition for these resources has led to a significant hike in prices.
Many industries had a major downturn in 2020 and their output has still not recovered. However, it is interesting to note that this didn’t happen to solar. Instead of decreasing, last year solar system installations across Australia soared.
World solar PV installations declined in 2019. Installations only fell 1% from 2018 levels, but this was worse than it looks because, on average, solar installations have seen a rapid increase of 20% per year. In 2020, solar installation boomed with a 28% increase from 2019 levels. In 2021, installs will be up another 29%, according to one estimate.
With these observations we can conclude that the solar industry was doing extremely well all last year and is now having trouble meeting the high demand. This is why the price of many — but not all — solar panels have risen.
Over two years, Australian inflation averaged under 1.4% but has ticked up since then and, over two quarters has averaged 3.4%.
The shortages of materials and workers and the price hikes we’re seeing around the world won’t last long. It already looks as though prices are heading down for many commodities. A strong point of market economies is they are very good at solving supply problems. In addition, history shows solar panel price rises don’t last long. The most prolonged increase was from 2004 -2006 when average prices rose by 12%.
It is predicted that the budget solar panels with 12-15 year product warranty will soon fall in price and appear cheap before mid-2022.
As the Government rebates are going down from January 1st onwards, now is the best time to book your system at a more reasonable price. With the longer warranty panels, you are guaranteed a higher energy output over time. Solar Panels with 25 year product warranties are likely to provide slightly higher average energy output over time than typical ones. Because of their durability, they’re likely to lose less capacity over time. Expect a few percent more output over 25 years compared to cheaper solar panels.
Contact Austra Solar today for a free quote on quality solar panels and get started on saving!