Solar panels line the roof of an office building in San Jose, Calif. (Ben Arnoldy / The Christian Science Monitor / FILE)
Study: Solar to be competitive within a decade
By Eoin O'Carroll | 06.18.08
A new study claims that solar power is approaching “grid parity,” in which costs are competitive with conventional retail electric rates throughout much of the United States.
The Utility Solar Assessment Study, released by the research firm Clean Edge Inc. and the nonprofit “green-economy” group Co-op America, says that as costs for solar panels and concentrating solar energy systems decline and as costs for coal, natural gas, and nuclear plants rise, the US will reach a “crossover point” around 2015:
For the first time in modern history, the price of solar-generated electricity is within striking distance of conventional energy sources for a wide range of applications. Already, solar power can compete in regions with high electricity rates and with favorable incentives. It can compete effectively for peak power production, in grid-constrained territories, and for applications that are off the grid.
According to its authors, the study is based on more than 30 interviews with solar, utility, financial, and policy experts.
The report says that, with proper investment, solar power can reach 10 percent of US power generation by 2025. The US currently gets less than one tenth of one percent from solar, but it has been growing quickly. Solar power has jumped to 3,000 megawatts in 2008 from 600 MW in 2003, the study says.
Reaching 10 percent, says the study, will require between $450 billion and $560 billion in capital costs by 2025, an average of $26 billion to $33 billion per year.
That sounds like a lot, but the report points out:
To put the projected investment in perspective, the Edison Electric Institute estimates that the U.S. electric utility industry spent more than $70 billion on new power plants and new transmission and distribution investments in 2007 alone. Conservatively assuming similar expenditures between now and 2025 (and most experts believe those annual costs will increase), we’re talking about a total investment of more than $1.2 trillion—roughly double to triple our projected investment for solar in the U.S.
The report notes that 2007 was the first year that the use of silicon by the world’s solar companies exceeded use by computer chip makers. This initially led to a spike in prices, but the costs are now beginning to drop.
The Guardian reported on Monday that a number of solar panel manufacturers are planning on dramatically increasing their output in the coming years. Many companies are also planning on producing “thin film” solar panels, which are cheaper than traditional silicon panels but are less efficient.
Another factor boosting solar power is Google’s RE<C initiative, which seeks to develop renewable energies that cost less than coal. In 2007, the internet search giant installed what at the time was the nation’s largest commercially-owned solar array at its Mountain View, Calif., headquarters.
In the right fiscal environment, solar power’s cost-effectiveness could accelerate further.
Writing in CleanTechnica, Sarah Lozanova calls for a renewal of the solar tax credit:
There is currently a 30% commercial tax credit for solar energy, but it is set to expire at the end of the year. There are purchase agreements for 3.2 gigawatts of concentrated solar power during 2007, but these solar power plants cannot be constructed before the tax credit expires. A long-term extension of the renewable energy tax credit is needed for large-scale use of solar energy. Many states also have renewable portfolio standards, but a national renewable portfolio standard would also help strengthen the industry.
Another report, prepared by the US Department of Energy and a wind power industry group, said that the US could reach 20 percent wind power by 2030.
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2. David | 06.19.08
If you have a $100/mo electric bill and energy cost $0.10/kwhr, you use about $1000 kWhr/mo. Or about 12,000 kWhr/yr. If you live in a typical region, you might have 1,600 sun-hours a year. Assuming your system nets 75% of the possible sun, you will net 1,200 sun-hour/year. If you need 12,000 kWhr/yr, you need about 10kW of PV. 10kW * 1,200 Sun-Hour = 12,000 kWhr/yr. It cost about $7-8/watt to install a PV system, so your system will cost about $75,000 to completely offset your energy use. But tax credits and rebates can cover a lot of the costs in some states, but you are just forcing your neighbors to subsidies your PV system when you use these subsidies. So if you don’t want to force your neighbors to pay for part of your PV system, then the payback is $100/mo (or $1,200/yr) for a $75,000 investment.
The other bad part of the story is that the electric utilities are being forced to pay you full retail price for the power you put back on the grid (during the middle of the day) yet they are responsible for the distribution and service of providing you power when you want it, so this is another subsidy which your neighbors cover for you.
But hey, who cares about your neighbors?
3. Gus | 06.19.08
“But hey, who cares about your neighbors?”
The above pricing is pretty accurate. Some areas you could be paying a bit more than $8/watt installed.
However the exciting part to me is about the possibilities of these thin solar technologies.
With oil prices at $135+ everyone is jumping into the game. From start ups like NanoSolar to exstablished monsters like Intel and IBM. NanoSolar claims that they can manufacture thin solar for $.30/per watt. Add a tidy profit of $.60 per watt, and include installation and inverter cost you are looking at around $2.00/watt. Or below the cost of building and running a coal plant.
They further claim: to be building a facility in CA that can manufacture more solar material than the rest of the industry combined, have installed their first site in Germany, and to be sold out based on pre-order for the next 3-5 years.
I didn’t intend to write a commercial for NanoSolar. There are several other companies in the space that are manufacturing thin film solar.. the point being, traditional PV polysilicon based solar, may not be the technology that takes hold.
If the nanosolar technology is real and can be made commercially available. The 75k poly silicon based PV will be replaced by a $20k thin film system.
At that point, there is no need for anyones neighbor to complain.
4. Noah Harbinger | 06.19.08
David,
I think your comment about “your neighbors are paying for it” is invalid with respect to returning surplus power to the grid during daytime hours. The existing grid can handle this surplus power without any additional investment, and transmission losses are negligible from home to home, so the power company doesn’t incur any additional costs to pass on. Your power could be thought of as powering your neighbors’ homes, so in that sense, they are paying you for the power. But they are not paying any more for that power than they would have otherwise. So how does this translate to any additional cost to them?
Our elected representatives have determined (and I agree) that subsidizing rooftop solar is vital to maintaining a stable energy policy over the long term. So yes, that does cost everyone — but in the long run, it benefits everyone to a far greater degree.
5. Marc | 06.19.08
Nowhere in any discussion of fuel pricing has the cost of “defending the national interests” been mentioned. Obviously this is a factor that is non-linear to the supply/demand algorithm. But it is undeniable that the cost is there. The argument for coal fueled generation would probably be able to delete this cost from its equation, but that fuel source has its own set of least favored consequences.
PV in all its generating forms would seemingly be free of needing defense expenditures. Likewise wind,geothermal and hydro-electric. The percentages that these alternative generating sources could provide the national appetite appear to be a long way from 100%. Additionally elecrical power generation is just one part of the current hydrocarbon demand.
All that being said, the race begins with the first step. No one technology is going to supplant fossil fuel primacy as the source in energy production in the near term. But all this discussion has ‘long term energy policy’ written all over it. That is something this nation has not had the political will to implement since President Carter brought the subject up decades ago.
Unfortunately this political situation appears to be substanially unchanged. The change away from outside sources of fuel/energy will have to be worked via supply side economic pressures. That is to say, without a national strategy. Hopefully the missteps that are inherent to an adolescent technology will not incur any long term consequences (ie spent fuel rods from nuclear power).
6. Dave O | 06.21.08
Nanosolar, which shocked its competitors in December when it announced it would begin profitably selling thin-film panels at $1 a watt. That figure is solar’s holy grail, the point at which power from the sun becomes generally cheaper than coal, without the help of subsidies.
7. website design | 07.02.08
A new study claims that solar power is approaching grid parity, in which costs are competitive with conventional retail electric rates throughout much of the United States.
8. Tom | 08.05.08
What David fails to also mention is that with every 1000 Kw’s you create you are given a ‘Green Tag’ stating you produced 1000 Kw’s of clean energy with your system.
Some companies are required by law to produce a percentage of their electric use from a form of green energy. If these companies do not cover this percentage of green energy they get fined. But, rather then getting fined there’s a system setup so that you can sell your green tags to these companies to help pay for your system.
In 2008 these tags sold between $250-300 per tag in NJ. So a system that produces 12,000 Kw’s of energy would also be creating 12 green tags which you’d be able to sell to offset the cost of the system.
In NJ, they’ve stopped offering rebates (which was around 60-80% of the installation depending on when you installed the system) and instead decided to up the green tag fines to companies. This changed the rules some entering the 2009 year which, if estimates are accurate, should increase the sale of green tags to $600+ per tag.
Now, this might only be a NJ thing (check your own state) and you only have 15 years worth of green tags to sell. But, in the long run you should make back your initial investment and then some with the energy savings you’ll experience.
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1. Jaimye | 06.18.08
How much would it cost to have solar panels that would provide energy for an average home? Is that even possible at this time?