If prospects for lower energy bills and a role in reducing the country's reliance on fossil fuels aren't convincing enough, a discounted price tag on solar panels may entice more consumers to give their roof--and their household budget--a makeover.The past 12 months have featured one of the most dramatic price drops in the history of the solar market, according to industry figures. So far in 2011, the cost of solar photovoltaic, or PV, panels has come down by 30 percent from 2010 levels and could have more room to drop, according to the Solar Energy Industry Association (SEIA). Separate data produced by the Lawrence Berkeley National Laboratory show a 17 percent drop in prices between 2009 and 2010, and a drop on pace to reach 22 percent this year.[See 10 Places to Buy a Retirement Home for Under $100,000.]The looming, although staggered, expiration of some key tax incentives is also pushing homeowners to move sooner rather than later. Falling prices are coming just in time to help offset these lost tax breaks, according to industry participants. The industry is also getting behind more flexible financing means, including loan programs that help limit upfront costs. Leasing home solar systems is another option, and consumers are taking advantage of the trend."Innovative business models by solar companies--including leasing models--have helped to make solar a cost-saving option," says Rhone Resch, president and CEO of the SEIA. "It's not just in the Southwest states. Solar is an option for homeowners in all 50 states. New Jersey, for example, is the second-largest solar market in the country."Not all areas offer the same incentives or financing options, however, and researching the pro-solar climate of consumers' respective home states is recommended. Visit the U.S. Department of Energy's database for state incentives for renewable and efficiency, known as DSIRE, at www.dsireusa.org.This year, a 30 percent cash rebate through the U.S. Treasury Department comes to an end after a one-year extension from its previous deadline. And the 30 percent federal tax credit program will sunset at the end of 2016. The tax credit covers 30 percent of the cost with no upper limit. Existing homes and new construction qualify, including principal and second homes; rentals do not qualify. See energystar.gov for more details on tax credit qualifications.[See 10 Great 'Green' Home Improvements for 2011.]Supply and demand shift. Still, changes in cost and availability look to continue with or without government help. The pricing shift has a lot to do with what had been a limited supply in a relatively young industry that's finally catching up with demand. In the first quarter of 2011, the United States installed 252 megawatts (NYSE: MW - News) of grid-connected PV systems, for 66 percent year-over-year growth compared with first-quarter 2010 installations, according to the SEIA. The longer-term trend is also evident: Nationwide, the number of homes installing solar has gone from under 10,000 annually in 2006 to nearly 50,000 in 2010."Pricing supply and demand curves have swapped and solar, fundamentally, will now behave like other energy markets," says Jim Pape, president of the residential and commercial business group, at San Jose, Calif.-based SunPower. "Today, in the PV industry, it's what we might call oversupply but for customers, it's normal supply. Companies [that sell and install systems] will have to differentiate themselves with quality and service."In fact, the pricing shift and industry glut in supply has claimed at least one victim. California-based international solar provider Solyndra, which focused on commercial and not residential installations, filed for bankruptcy on September 6, carrying $783 million of secured debt. Now, the company is at the center of some pre-election heat on the White House because of substantial federal support for the company.Other observers aren't yet convinced that solar, as a national energy source, is economically viable without government help, but the progression toward more efficient economies of scale, emerging with steadily rising demand and falling prices, is moving solar ever closer to being able to stand on its own, the industry argues. For residential applications, viability will vary from household to household.The average size of a residential system is about three to five kilowatts. The cost of the system is generally $10,000 to $20,000, after state and federal incentives are factored in, including the 30 percent federal tax credit, according to SunPower data. Exact costs will vary. Adding installation costs boosts the total price to between $25,000 and $35,000. Panels typically make up less than half the costs of an installed solar array, with construction, wiring, and other components adding the rest. Systems typically last for 25 to 35 years.[See Will This Home Renovation Pay Off?]Going the rental route. An increasing number of consumers are opting to lease systems. For example, so far in 2011, more than a third of all residential installations in both California and Colorado were solar leases. Just two years ago, only 10 percent of residential installs in California were solar leases and there was no market for leases in Colorado just a year ago, according to the SEIA.Depending on how high an energy bill was prior to a solar lease and the exact terms of a particular lease, some households will find themselves getting money back in exchange for their switch to solar.One retailer offers this example: For a typical three-bedroom home with a current electricity bill of $200 per month, a medium-sized, 4-kilowatt solar system is recommended. The system will generate enough power offset to trim the electricity bill to $60 per month. With a zero-down lease and a $110 per-month lease fee, the net savings would be $30 per month from day one.SunPower's Pape welcomes the leasing trend but says that he finds some consumers aren't adequately doing their homework for such a major home upgrade; some would-be participants assume that there is less responsibility in renting a system compared with owning one. Pape likens the transaction to leasing a car, but adds that the expense and lifespan of a solar installation is considerably longer than car leases. Leasers --of cars or PV panels--are still ultimately responsible for the correct use and care of the product.SunPower offers leases and financing in participating states; so does San Mateo, Calif.-based SolarCity. The company this summer joined with Google for the creation of a $280-million fund to help finance and lease residential solar projects.The fund is SolarCity's largest project financing fund and the largest residential solar fund created in the United States, the companies said in a release. SolarCity has now created 15 project funds with seven partners to finance $1.28 billion in solar projects in Arizona, California, Colorado, the District of Columbia, Maryland, Massachusetts, New York, New Jersey, Pennsylvania, and Texas. Of the more than 15,000 solar projects completed or underway, some 12,000 opted for financing options, while 3,000 purchased their systems.[See 7 Easy Ways to Trim Your Mortgage Costs.]Granite countertops and solar panels? The inclusion of a solar system in a newly built home or as part of a home resale is becoming a major sought-after feature, industry proponents say. Solar inclusion at the time of building has also expanded from just those developers and contractors promoting themselves as "green" builders to more of the generalized home construction business.An analysis of the impact of residential PV energy systems on 2000-2009 home prices in California, released in April 2011, showed that the systems retain most of their value in resale. The report was authored by Lawrence Berkeley Labs, for the Department of Energy and renewable energy groups. According to the report, the effects range, on average, from approximately $3.9 to $6.4 per installed watt (DC) of PV, with most coalescing near $5.5 per watt. This corresponds to a home sales-price premium of approximately $17,000 for a relatively new 3,100 watt PV system (the average size of PV systems in the study). These average sales-price premiums appear to be comparable to the investment that homeowners have made in PV, excluding installation costs.Whether considering the appeal of resale or cutting monthly electricity bills to zero, an investment in a rooftop solar system can eventually pay for itself. The leading retailers offer calculators on their websites.Says SunPower's Pape: "The financials are often better than you think; if you're interested, you should look into solar, the net cost is less than you think and there are incentives, depending on where you live."