Have you noticed a lot more solar panels on homes recently? While an increase in solar panel installations can partly be explained by pointing out that people are more aware of energy conservation issues and want to save money, there’s a much simpler reason why there are more panels on roofs all of a sudden: they’re now super cheap, and aspiring solar panel owners don’t have to pay for the panels or their installation up front anymore.

One factor is that there’s a global glut of solar panels. The price has fallen significantly in recent years. During the last decade, industry and government in China realized that solar power would be important in the future, which it is. They responded to this prediction by building a huge number of solar panel factories and cranking them out. Factories began cranking out panels in 2009, leading to a massive oversupply. That cut prices worldwide, making it a lot cheaper to cover your roof with solar panels.

Of course, “cheaper” is relative. If you haven’t looked into it, you might not realize how expensive having solar panels installed on your roof can be. NPR’s Planet Money team hung out at a site on Long Island, where covering a home with 41 panels would cost about $25,000 including installation. What do homeowners who don’t have extra cash and who don’t want to take out a loan to save money on their power bills do? It turns out there are companies that will bear the cost of installing panels, in exchange for a monthly payment.

This isn’t altruistic, of course: investors are putting up the money to put solar panels on roofs across the country. They’ll make that money back with interest. SolarCity gets to employ installers and sell panels, and homeowners get to pay slightly less for electricity over the next few decades while paying off the bill for their installation.

Episode 616: How Solar Got Cheap [Planet Money]

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