Solar_Retail EnergyWhen homeowners and businesses are thinking about adding solar power installations, cost is almost always the key consideration. As much as adopting sustainable energy solutions is an important goal, nobody wants to be losing money hand over fist in the process.

The problem is that comparing the up-front costs of a solar installation to commercial or residential electric rates is not always as simple as it seems.If you’re taking out a loan to pay for the system, or using one of the newer financing options that have been developed in recent years, you should have a monthly number to compare to your electric bills, but even that can be unreliable.

For the solar industry as a whole though, there is one key statistic that everyone has been watching – levelized cost of energy, or LCOE. This figure tries to calculate how much a solar energy project must charge per unit of energy in order to break even.

While it’s difficult to compare intermittent, or variable, power sources like solar energy with other technologies like coal and natural gas when it comes to LCOE of a new project, you can reasonably compare the levelized costs of solar power to what you’re paying for electricity now.

According to Solarbuzz senior analyst Michael Barker, it appears that the calculation for solar is edging closer and closer to retail electricity rates in the U.S., particularly for commercial electric providers. For commercial electricity, the LCOE for solar projects in Arizona has fallen to nearly 15 cents per kilowatt-hour, barely more than half-again what Arizona businesses are already paying.

The figures aren’t quite as close for other states like California and Massachusetts, or for the residential sector, but LCOEs fell in the fourth quarter of last year from the year before across each category.

Meanwhile, in far off Hawaii, the cost of solar has actually fallen below retail prices, reach around half the cost of retail power for commercial customers. That may not be much of an accomplishment given Hawaii suffers from the highest electricity prices by a factor of two, but New York electricity prices are still number three behind Connecticut and others in the Northeast like New Jersey is not much better off.

One writer for the Baltimore Sun points out another advantage. While other technologies have their own appeal, solar power is increasingly cost effective and a good deal simpler than most of the other options people are looking at.