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Published on May 29th, 2011 | by Zachary Shahan

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GE: Solar Power Cheaper than Fossil Fuels in 5 Years



 
I reported a month and a half ago here on CleanTechnica that renewable energy passed up nuclear in total installed power capacity in 2010 (worldwide) and has been adding much more power to the world’s supply for years. I’ve also written about the clean economic of renewables compared to nuclear or fossil fuels like coal a number of times. Now, GE predicts another important milestone along these lines in the coming years.

“Solar power may be cheaper than electricity generated by fossil fuels and nuclear reactors within three to five years because of innovations, said Mark M. Little, the global research director for General Electric Co. (GE),” Bloomberg reports.

Well, you can see pretty clearly how much solar costs are dropping in this graph from the recent IPCC report on renewables, shared over on Climate Progress on Thursday.

And you can see from this graph below, which I shared previously when discussing renewable energy compared to nuclear that some studies have already identified a solar-nuclear crossover.

Solar and Nuclear Costs: The Historic Crossover

Now, even without externalities included (which bring the cost of fossil fuels up considerably), solar is on its way to eclipsing other major energy sources.

Bloomberg goes on to note the following:

“The cost of solar cells, the main component in standard panels, has fallen 21 percent so far this year, and the cost of solar power is now about the same as the rate utilities charge for conventional power in the sunniest parts of California, Italy and Turkey….”

Think stories on solar power breakthroughs get redundant? Well, sorry, but that’s because there is so much going on to make them cheaper that there are significant breakthroughs nearly every week. And that’s expected to continue. Solar power offers a tremendously good return on investment (ROI) in many states due to fairly low costs and good government incentives, which means that you can really make good money by investing in solar today.

But cost reductions will make that more and more possible without any subsidies at all….

“If we can get solar at 15 cents a kilowatt-hour or lower, which I’m hopeful that we will do, you’re going to have a lot of people that are going to want to have solar at home,” Little said

Looks like a good plan and good progress is being made. Expect more good news along these lines soon.

Connect with me on StumbleUpon, Facebook, or Twitter @zshahan3.

Related Stories:

  1. Renewable Energy Passed Up Nuclear in 2010
  2. Solar Power Almost as Cheap as Natural Gas in Six States
  3. Solar Panel Film Increases Efficiency 300%, Cuts Costs in Half
  4. U.S. Poised for Wind and Solar Power Boom
  5. International Solar PV Nearly Doubled, PV Growth Doubled in 2010
  6. Full Cost of Coal $500 Billion/Year in U.S., Harvard Study Finds
  7. Cost of Wind Power — Kicks Coal’s Butt, Better than Natural Gas (& Could Power Your EV for $0.70/gallon)
  8. Solar Power Blowing Up in the United States
  9. Historic Report: Solar Energy Costs Now Lower than Nuclear Energy

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About the Author

is the director of CleanTechnica, the most popular cleantech-focused website in the world, and Planetsave, a world-leading green and science news site. He has been covering green news of various sorts since 2008, and he has been especially focused on solar energy, electric vehicles, and wind energy for the past four years or so. Aside from his work on CleanTechnica and Planetsave, he's the Network Manager for their parent organization – Important Media – and he's the Owner/Founder of Solar Love, EV Obsession, and Bikocity. To connect with Zach on some of your favorite social networks, go to ZacharyShahan.com and click on the relevant buttons.



  • Maphryg

    Solar power is a very great source of electricity. it helps a lot of people around the world, especially the low income people. i do second the idea of solar power use.

  • Dcard88

    Also keep in mind that CA is buiding several gW of generation and will have a 20 year projected cost of around .12 / watt (I think)  By 2020 we could easily triple that.

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  • http://www.sol-solution.net Solar Don

    It is already cheaper than the grid in Hawaii, Arizona, New Mexico, southern California and parts of Texas. In places with high DNI (Direct Normal Irradiance) CPV will become much more prevalent. The best CPV solar cells have gone from 32% in 2000 to 43.5% today. Other advancements on the horizon should get system efficiency past 40% within two year. Some of these may include the Rainbow Concentrator by Sol Solution (www.sol-solution.net) and low profile concentrator by Morgan Solar (www.morgansolar.com). As the efficiency goes up and the price goes down, the geographic range where solar is less than the grid will increase.

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  • Matt P.

    On the other portion of the chart. Why the jump in wind (both on and off shore) when the got above 40k-50k cum global MWs?

    • Anonymous

      hey Matt, it’s been awhile since i read about that, but was something to do with the technological components i think,.. and the market also was not as good as it had been (partly due to the economy as a whole & partly die to policy instability).. again, think this is what it was but not 100% sure now

  • http://www.todae.com.au/SolarPanels/SolarPanels Solar Panels Cecile

    Like every technology, prices of solar are slowly decreasing, soon enough more people will enjoy the possibility of using a clean, cheaper and free energy : the sun.

  • Anonymous

    & this one as well :D

  • Anonymous

    & this one as well :D

  • Anonymous

    Thanks for the links/update!

  • Anonymous

    Thanks for the links/update!

  • Anonymous

    Installed solar dropped below $5/W in LA last year.

    Leases, yes, beware. It’s hard to imagine that one can’t do better by buying a system and financing it.

    As for forecasting flat electricity prices for the next 20 years, that seems questionable. I suspect it’s mostly based on cheap natural/shale gas. If so, there are a number of unknowns that make that forecast shaky.

    First, NG prices are temporarily low due to supply glut. Prices are so low that it doesn’t pay to drill new wells. When the oversupply is used NG prices will likely rise 50% or more based on new well costs.

    Second, fracking and seepage regulations may drive up the cost of gas.

    Third, we may well have a carbon price in our near future. If the climate continues to kick us around like it has the last few years people are going to get serious about getting us off of fossil fuels. That will make gas (and coal) generated electricity more expensive and cause us to spend more to create new (non-carbon) capacity.

    Longer on, yes cheaper electricity prices. Install a wind turbine and pay it off in 20 years. Then you’ve got at least another ten years of ~ $0.01/kWh electricity. Install a solar panel and pay it off in 20 years. Then you’ve got at least another twenty years of $0.00/kWh electricity.

    (No new nuclear is coming on line. Even the two reactors in Georgia which looked certain are now looking quite shaky. Furthermore, it’s very clear that any new nuclear would only raise electricity prices.)

    • madsatyrist

      If solar is really going to be cheaper than any other power option in five years or less, what does a carbon tax matter? Cheaper is going to rule no matter what, because it’s higher profit margin. At this time, there’s no longer a point to any kind of carbon tax in the USA as far as I can see. It might spur adoption a tiny bit, but the effort would be more productive spent on pushing down utility inspection fees and hookup charges. That’s the real enemy now.

      • Bob_Wallace

        The important question we will have to face as a nation, and as a world, is how long are we willing to keep using fossil fuels.

        Are we OK with letting market forces control the process and still be using fossil fuels 40, 50 years from now or do we want to get serious about climate change and get fossil fuels out of our energy mix in 15, 20 years?

        Clearly wind and solar will push most fossil fuels out of the grid supply over the next many decades. If nothing else coal will disappear because the cost of building coal replacement plants for those plants that wear out will drive the price too high. Natural gas will go away because we just don’t have enough to keep burning it for many decades.

        But if we want the transition to go faster then we need to put a thumb on the scale. Artificially increase the price of burning carbon and generation will shift to renewables faster.

  • Anonymous

    That solar is only a tiny percentage today does not mean that it will take many decades to reach significant penetration. The one thing holding back solar is price. And price is dropping extremely fast. Industrial scale installations in sunny areas are now producing power for $0.16/kWh and that price is expected to drop to ten cents in the near future.

    New technologies seem to linger at a small scale and then, once critical issues have been solved, they take off. When the first Model Ts started rolling off the assembly lines in 1908 there were very, very few automobiles on American city streets. Looking through a lot of 1930′s New York street scenes I was struck at how one just not see horses (except in parades). In two decades affordable autos emerged and replaced horses in our cities. And by a decade later, replaced horses for transportation in the countryside as well.

    The same has happened with slide rules and calculators. With typewriters and computers. With film and digital photography.

    Solar is on route to becoming our least expensive way to produce electricity. We’re not far from $2/watt installed for larger arrays. When that happens the price of solar-electricity drops below a dime. And it is expected that installed costs will drop to $1 over the next several years, taking the price of solar below that of wind.

    Sure, solar produces only a few hours a day, but if it’s the cheapest power then we’ll design our grids to work around that constriction. We’ll use more dispatchable generation (the gas plants we’re now building), we’ll build more storage (underway) and we’ll do more load shifting (EVs are great for this function).

    And, yes, people will continue to be hook to the grid (except for people like me for whom hooking up is just too expensive – $300,000 plus). It does not make sense to create millions of free-standing utility companies.

    The difference will be that for those who make the choice to do rooftop solar (and over 25% of Americans are interested in doing so) their utility bills will be lower. Including paying off the system.

    If their system is large enough they might pay no power bill at all. If they can sell excess power to the utility company when wholesale prices are high and take back power when wholesale prices are low then the utility company will be ahead by maintaining the connection to them for free. That’s just simple economics.

  • Anonymous

    Andrew, that article was published in December of last year.  That means that the data was collected earlier.  These things do not get written and reviewed overnight.

    The price of PV fell very strongly in the first half of 2011, much faster than predicted.  Industrial scale solar is now $0.16/kWh in sunny areas.  That’s more than a 10% drop from your $0.18 low end figure.

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  • tibi stibi

    i’m supriced that it is not there jet. in holland i can by a 2760 Wp for 6071 euro.
    this is a full pack. which is just a bit over 2 euro’s per wp.
    this is not subsidized and even includes 19% VAT (BTW)

     

    • Anonymous

      Does that include installation and permits?

      We can buy a grid-tie solar system for less than $2/watt here in the US.  Installed prices are a lot higher, partially because of permit/inspection fees.

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  • Anonymous

    I’d like to see a well worked piece on the cost of solar in relation to other forms of electricity generation. 

    There are multiple pieces on the web about GE’s Little “cheaper than coal” statement, but most don’t make it clear that he was using Connecticut’s 16 cents/kWh residential rate as his benchmark for “cheaper”.   And I don’t know if he was including subsidies in his preditctions.

    The cost of power from an older, paid off coal burning plant is somewhere in the nickle or less range.   The hidden costs, if included, would take the price likely over 20 cents per.  The cost of electricity from a newly built coal plant could be as high as 20 cents per even before health and environmental costs are included.

    The “Historical Crossover” study compared, if I remember correctly, the price (including government subsidies) of installed residential solar in North Carolina to the retail price of electricity. 

    Both of these reports tend to get headlined as “Solar Cheaper than Coal” but without fuller explanations I fear that many will look at the wholesale price of coal-produced electricity and dismiss the message.

    • Anonymous

      I agree with Bob_Wallace, this unqualified statement by GE and the subsequent article is just cheer-leading.  Solar is still $.18-$28 per kWh and that will be only marginally effected by the reduction in the PV costs.

      Plus, it isn’t reliable or suitable for most of America.  It will be interesting to see how long these new “cheaper” solar panels will last.  

      • Anonymous

        Solar panels have fallen in price more than 20% so far this year with 30% predicted for the full year.

        I wouldn’t call that marginal.

        Predictions are for solar to hit $2/watt installed and even as low as $1/watt installed.  Two dollars per watt means $0.06/kWh electricity.  One dollar, well, you can divide by two.

        Solar works just fine everywhere in the US, just much better in some places.  As the price continues to drop it will make sense to install more and more solar to replace more expensive (and harmful) fossil fuel use.

        The difference is that in some place which gets 5.5 hours of average sun (the sunny Southwest) is going to get their solar electricity for a better price than will the Northeast which averages 4.2 hours of sun.  About 25% cheaper.

        Fairbanks Alaska averages 4 solar hours per day.

        Projections are that solar could become as inexpensive as wind and the two, along with storage, could be the main ways we power our grid.

        At this point thin film panel companies are warranting their panels for 20 years.  Since price calculations are made using 20 year lifetimes any additional years are free gravy.

        Early build silicon panels (the old Arcos) are over 35 years old and still going strong.

        • Anonymous

          Nobody buys the cheer-leaders “predictions.”  For large installations the latest projects are still $5-$6 installed.  

          As DOE pointed out when they launched their “Sun-shot” project that seeks to “reduce installed solar costs 80% to make them competitive.”  

          $6 – 80% would be $1.20 per kWh.  They referred to that being a “miracle.”  It would be a miracle to get to $3 installed.  Wishful thinking doesn’t create miracles – breakthroughs do.

          • Anonymous

            Maybe GE’s got a miracle or two up its sleeve :D

          • Anonymous

            That’s the “estimated” cost.  Let’s see how it turns out.  Find a finished project with these dramatic savings.

            *The total cost to build the Sybac solar farm is estimated at approximately $7 million, or $3.50 per watt, a price that is significantly less than the regional average price of $5.50/watt calculated by NREL.

          • Anonymous

            “First Solar’s claim to fame for the past several years
            has been in its ability to churn out large numbers of panels and a
            fairly low cost. Last month, the company said it was able to produce
            panels at $1.08 per watt. The figure, however, is a blended average of
            all of the company’s factories. First Solar’s cost out of its Malaysian
            factories is lower, closer to 75 cents.

            The $40 million system at Sempra is comprised of 168,300
            panels, which First Solar installed at a cost of $3.17 per watt,
            Bachman wrote. (The installed cost is higher because it includes frames
            and installation, not just the solar module.)”

            http://www.greentechmedia.com/articles/read/first-solar-reaches-grid-parity-milestone-says-report-5389/

            That’s from 2008.  Since then First Solar has reduced it’s panel cost to about $0.75/watt and expect to be close to 0.50/watt within the next three years.

            Sybac should have already come on line.  The linked article is from February and they were a month from….

          • Anonymous

            From the same article Bachman added:

            “But Bachman went on to argue that the solar industry cares too much about the cost of producing and installing panels, and not enough about the how much a system costs in terms of its power generation, in kilowatt-hours. He noted that financial analysts should do so when dissecting the average selling price of a company’s panels.
            “By focusing on the cost/kWh calculation, we can compare competing business models on a defined metric that is independent of technologies,” and this: “After figuring out how much electricity the system is generating, Bachman determined that it costs $0.164 per kilowatt hour.”—–It will be helpful to see some real facts regarding these costs.  DOE still claims by 2016 “Solar will cost between $.21 and $.31 per kWh on a levelized cost basis.

          • Anonymous

            I suspect that First Solar cares about how much generation per kWh costs since they’ve become a builder of solar farms in addition to being a manufacturer of panels.

            As for the DOE projections, they’re already wrong on a sunny location, industrial scale installation.  You might look back and see what sorts of numbers they used to predict twenty cents plus.  Most predictions from a few years back greatly underestimated how rapidly PV prices would fall.

            If you want some numbers which are considered by most to be reliable check SolarBuzz….

            http://solarbuzz.com/facts-and-figures/retail-price-environment/solar-electricity-prices

            Do note that those  numbers are averages.  Open Neighborhoods in LA is installing residential at $4.78/watt, $4780/Kw.  That’s about 1/3rd the national average.  (All non-subsidized costs.)

            LCOE on rooftop solar at $4.78/watt installed (no subsidy), financed at 5% and installed in a 5.5 sun hour location produces 19 cents per kWh power.

          • Anonymous

            I just noticed this on the SolarBuzz page…

            “The residential index is based upon a standard 2 kilowatt peak system,
            roof retrofit mounted. It is connected to the electricity grid and has
            battery backup to allow it to operate during times of electricity
            downtime. It is therefore also suitable as an index for off-grid
            residential uses.”

            Normal rooftop installations do not include banks of batteries and chargers/inverters to store and recover panel power for household use.  They use less expensive inverters to match panel output to grid voltage and forgo the stand-alone ability.

            That makes the SB residential prices higher than most residential systems would be.

            And the average residential system is probably larger than 2kW, thus spreading fixed costs thinner.

          • Anonymous

            “Sybac Solar Builds Largest Privately Held Solar Farm in Southeast

            The 2MW array will be completed next month and is comprised of 8600
            modules erected on 9 acres off U.S. 441.

            The total cost to build the solar farm is estimated at approximately $7 million, or $3.50 per watt….”

            http://planetgreencentral.com/2011/02/16/sybac-solar-builds-largest-privately-held-solar-farm-in-southeast/

            Last time I checked $3.50 is less than $5.

      • Anonymous

        Bob.. also, the solar tax credit of 30% declines to 10% in 2017 and many state subsidies have a cap on the total offered per year by the state.  A 20% state subsidy is actually worth ZERO if it isn’t available.   My take is that if solar is ever really popular it will be because the cost comes down to about 25% of the current cost.  So, from an economic perspective, I think I benefit by waiting a decade or so before doing anything.  

        • Anonymous

          The 30% federal solar tax credit is constantly declining, in terms of dollars paid out.

          Not long ago residential solar was $10 or more per watt.  $3+ cash back per watt.  Now residential solar has started to drop below $5, $1.50 cash back.

          —-

          Will you save money by waiting? 

          Let’s say you would pay $6/W installed now.  You’d get $1.80 from the feds and $1.20 from a “20%” state.  That’s $3/W out of your pocket.

          There’s a chance that solar (small residential system) will fall that low, but the bottom is starting to be determined by rack, wire and inverter costs, labor and permits.

          And there would be ten years of buying electricity.  4.2 hours of sun, 365 days, ten years would be around 15 kWh.  At $0.10/kWh that’s another $1.50 you could take off your $3/W cost.  (More if you live in a sunnier place than “Boston” and pay more that a dime for your highest tier power.)

          Seems to me that you would have to bet on getting solar installed for about $1/watt and that’s not a bet I would place.

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