Microeconomic Analysis: Installation of Solar Panels

Microeconomic Analysis: Installation of Solar Panels

Introduction

The U.S. government has a plan intended to promote consumption of solar energy as an alternative source of energy (Hoover, et.al, 20012). A company known as1366 Technologies has received funding from the U.S. government to establish a plant for manufacturing of photovoltaic solar cells. A number of other solar manufacturers and power companies have received government funding ("under the stimulus funds from the 2009 American Recovery and reinvestment Act") to the tune of twelve billion dollars to establish sixteen solar projects (Glenn et.al, 2013: 374). The government subsidies are aimed at increasing the manufacture affordable solar panels for the consumers. The manufacturers of solar panel will apply the latest technology that will result to a significant reduction of production cost of solar panels. “The company plans to cast silicon wafers for solar panels directly from the molten output of industrial furnace” in order to save half of the silicon cost otherwise wasted when cutting the block of pure silicon with a saw (Glenn et.al, 2013: 375). Also, the company intends to coat the Wafers with materials that shall improve performance of the panel. The U.S. government intends to increase the global demand for solar energy hoping to increase U.S. market share for solar panels. However, many people are still doubtful of the effective of solar energy as an alternative source of energy whether at present or in the future.

Companies intend to charge high prices for products that are using new technology to manufacture affordable solar panels and recover the cost of investment in technology within a short period (Smock et.al, 2007). However, pricing of the produc...

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