2012-02-16

Co.Exist

Solar Power Pricey? It's Cheaper Than Anyone Thinks

Models for predicting the cost of solar power may be totally off-base. What does that mean for you? The moment when you’re wasting money by not having solar panels is coming sooner than you know.

That magic moment when electricity from sunlight costs the same (or less) as energy from conventional sources is known as grid parity. At that point, the rate of solar power installations may outpace even today’s blistering pace since one kWh of solar power will cost no more than an equivalent amount of power from coal or other sources.

For decades, that moment has resided in some distant tomorrow. But that day will arrive faster than predicted because of faulty assumptions analysts are using in their calculating according to a recent study (PDF) in the Renewable and Sustainable Energy Reviews.

Author Joshua Pearce at Canada’s Queen University, argues the cost projections for photovoltaic are far too high given the remarkable advances and plunging prices of the last few years. "Older models for determining solar photovoltaic energy costs are too conservative," says Pearce in ScienceDaily. Those faulty numbers push solar grid-parity years later than the likely date.

Global PV solar installation grew from 0.26 GW to 16.1 GW between 2000 to 2010, while manufacturing costs fell 100 times. Yet estimates plugged into today’s models often remain out of sync with reality: One 2010 study estimated production costs as $7.61, while a 2003 study set the amount at $4.16. Today, bulk solar panels purchased on the market in 2011 cost less than $1 per watt. While there’s plenty of room to argue with legitimate assumptions, Pearce cites dozens of studies to show how the figures are systematically too conservative.

"There is a very well established economy of scale in the solar industry. It is very similar to the computer industry--the more they make the less we pay," writes Pearce by email. This perfect storm of new supplies, cheaper technology, and resultant fierce competition has driven prices to shockingly low levels. "Now the solar industry is set to start competing directly with the big energy industry titans of the fossil fuel era. Why would you pay for coal-fired electricity if you can
generate it cheaper on your own roof?"

If you don’t want to wait for solar grid parity, it has already arrived in parts of the U.S. (California and Hawaii), and it will hit Germany in 2013, three years ahead of schedule. There’s no precise forecast for that magic moment in the U.S. as a whole, but the researchers in the study have released an online calculator to determine the true costs of solar energy in your area.

Regardless, it seems that the parity moment is arriving in the next few years around the world, Jeremy Rifkin, an adviser to the German government and European Union on climate change and energy security, told Reuters. "Solar prices will keep falling. Grid parity is going to be reached in many countries between now and 2015 and that’s a good thing. I don’t think the world will need any more subsidies for solar by 2020."

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5 Comments

  • Not gonna happen

    This is a hilarious article, it completely ignores the fact that almost all solar manufacturers are losing millions right now.  In fact, everyone is losing money, all the down to the raw material companies.  It is now cheaper for a manufacturer to pay someone else to manufacturer, and let them take the losses, than to manufacturer themselves.  

    My point being, this can't last, and prices are going up...sorry Coren.  

  • NoSocialism.com

    You don't understand the economics of Solar.  Keep in mind that during the Carter years, an array that would power an entire home costs around 22 MILLION dollars.  Today that price has fallen to about 22 THOUSAND dollars!  That's right, not a typo it went from $22,000,000.00 to $22,000.00, dropping 3 zero's along the way.
    Solar technology is VERY similar to Silicon Computer chips.  I remember when a 120Mhz chip cost over $1000.00 and that's without adding the surrounding computer.  Today 3Ghz chips are the norm and can be bought for as little as $100.00.  The Solar industry has had VERY similar moves forward in technology compared to the computer industry where about every 3 to 4 years, efficiency doubles.  5 years ago you COULD NOT buy a 100 Watt Panel, you had to buy 2 or 3 of them to make 100 watts and it cost nealy a Thousand bucks a panel.  Today Home Depot is selling single 100 watt panels for 200 bucks!I believe that within 5 to 10 years the MAJORITY of new homes will be built with Solar Air Conditioner Arrays, then within another 5 years or so Whole House Arrays.  Not because there's any mandate or rebate or anything else, only because it will be cheaper than powering the home off the Grid.As for those companies losing millions, Amazon lost money for YEARS to establish itself as THE leader in online Merchandise Leader

  • Triathlonluke

    came over here from fastcompany to read an article.  after 10 minutes of scrolling on all 3 sections I still can't find it.  Need a fourth section, CO.FRUSTRATED