Solar Power Should Be Cheaper than Coal, Gas & Nuclear by 2018


Photo Credit: Andreas Demmelbauer via Flickr/CC BY

You've probably seen the terms 'grid parity' float by on these pages plenty of times in articles about solar and wind power. That's the term that describes what clean energy advocates consider as something of a holy grail -- the point where a particular form of renewable energy becomes as cheap to generate as the market standard in a given region. It's when solar panels produce electricity as cheaply as does a coal-fired power plant, for instance. And in a handful of places around the world (Italy and Germany among them) it's already happening.

But an intriguing pair of Grist articles say that 'grid parity' is child's play -- one physicist argues that solar power will be flat-out cheaper than any other energy source by 2018. Here's the meat of Kees van der Leun's argument:

let's assume that the cost of solar PV electricity needs to drop to below $0.06 per kWh to live up to the claim that it's the cheapest source of electricity. In sunny regions, we will need to halve the cost of PV power again to make that happen. Three doublings of cumulative capacity will do, since, according to PV's rapid learning curve, every doubling of capacity leads to a cost reduction of 22 percent. After three doublings the cost will be multiplied by 0.78 * 0.78 * 0.78 = 0.47.

Cumulative installed PV capacity globally was 40 gigawatts (GW) at the end of last year. Three doublings mean this has to grow by a factor of eight, to 320 GW, to achieve the necessary halving of cost. From 2005 to 2010, PV capacity installed annually grew by an average of 49 percent per year. Even if this slows down to 25 percent per year in the near future, we will reach 320 GW in 2018 -- that's only seven years from now!

If these calculations are even anywhere close to accurate,- the long awaited clean energy revolution will be well under way in less than a decade. So despite red herrings like the Solyndra debacle, the solar power industry is on track to become the most lucrative energy sector in the world.

And here's why the cost is dropping so fast, in case you were curious:


Via Grist: "Learning curve for silicon-based solar PV modules. Note the logarithmic scales. Colored lines represent various technologies."
Image: Wim Sinke, ECN. Sources: Navigant Consulting, EPIA

Van der Leun explains:

"At a very large scale, the cost of manufacturing anything drops to just above the cost of its base materials. As scale goes up, per-unit costs come down. This is known as a "learning curve" -- the price per unit of capacity comes down by x percent for every doubling of cumulatively installed capacity. For solar PV modules, the learning rate has been exceptionally high, averaging 22 percent for the past two decades. The cost of the "balance of system," i.e., all other components needed, follows this trend line closely. So this is what we see happening now in PV."

Dave Roberts argues that this means that policymakers should start gearing up for the incipient seismic shift. They won't, of course. At least not in the United States, where the fossil fuel industry has a stranglehold on energy production which they won't loosen until market signals are as obvious as a slap in the face.

But be assured: Solar will be cheaper than coal, and sooner than you think.

Tags: Clean Energy | Solar Power | United States

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