The economic conversion of sunlight into electrical power in a manner that competes with non-renewable fuels is the greatest challenge facing the solar energy industry. During the past 15 years, solar energy costs have decreased an average of 4% annually. Yet today, solar energy is 3-5 times more expensive to produce than electricity produced from non-renewable fuel sources. But changes to electricity’s competitive landscape are accelerating. Conservative forecasts from the US Energy Information Agency (EIA) show residential electricity prices reaching 12 cents per kWh in 2009. This represents a 42% price increase in just five years (EIA 2002 National Retail Electricity .0844/ kWh, Source: US Department of Energy). This is an average increase of 4.7% and outpaces inflation by 1.2%. Extending US Department of Energy forecasts, the average residential price of electricity is expected to reach 16 cents per kWh by 2015.

Installed commercial and utility scale Photovoltaic systems are currently economically competitive in many areas. Levelized Commercial Energy cost with Federal subsidies are currently less than .10 / kWh. Assuming a continuation of the 4.7% annual electricity price increases, and 2007 level Federal incentives, both residential and commercial systems will be less expensive than grid electricity by 2010. By 2015, electrical rates are forecasted to exceed solar energy with or without federal subsidies