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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."