Clean Power solar power

Published on June 10th, 2011 | by Zachary Shahan


Solar Power Graphs to Make You Smile

June 10th, 2011 by  

Solar power in some markets is already cost-competitive with power from fossil fuels or nuclear energy. It’s expected to take over more and more markets in the very near future as its costs continue to decline and the costs of other antiquated energy sources continue to rise.

–> For more on solar than is in this post, check out our Solar Power page, which we continuously update.

Nuclear, coal, even natural gas — even if you don’t take into account externalities (public health, environmental, and national security externalities that you really should take into account), probably won’t be competitive with solar soon (marking important crossovers in the history of our planet).

Two top solar executives — Tom Dinwoodie, CTO and founder of SunPower and Dan Shugar, former president of SunPower and current CEO of Solaria — and Adam Browning, the executive director of the Vote Solar Initiative, have been explaining this crossover to a variety of journalists and policy-makers this week and and they’ve used a number of cool graphs to help them do so.

Yesterday, Stephen Lacy of Climate Progress shared some of the graphs and the “ferocious cost reductions” that are making solar into a truly competitive energy source.

I thought I’d drop those and the most of the commentary below for you all to check out as well. Enjoy (note that this remainder of this is all from Stephen Lacy/Climate Progress, I’m just not sticking it in block quotes to make it easier to read):

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Notice in the first chart how steadily manufacturing costs have come down, from $60 a watt in the mid-1970’s to $1.50 today. People often point to a “Moore’s Law” in solar – meaning that for every cumulative doubling of manufacturing capacity, costs fall 20%. In solar PV manufacturing, costs have fallen about 18% for every doubling of production. “It holds up very closely,” says Solaria’s Shugar.

The “Moore’s Law” analogy doesn’t necessarily work on the installation side, as you have all kinds of variables in permitting, financing and hardware costs. But with incredible advances in web-based tools to make sales and permitting easier; new sophisticated racking, wiring and inverter technologies to make installation faster and cheaper; and all kinds of innovative businesses providing point-of-sale financing (think auto sales), costs on the installation side have fallen steadily as well.  The Rocky Mountain Institute projects that these costs will fall by 50% in the next five years. (Note: This chart is from RMI, not from the Dinwoodie/Shugar presentation.)

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What has driven these cost reductions? A staggering ramp-up in installations around the world that have driven an even greater increase in solar manufacturing. (By the end of this year, GTM Research predicts we’ll have 50 GW of module global production capacity.)

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As SunPower’s Dinwoodie puts it:

That 17 GW installed in 2010 is the equivalent of 17 nuclear power plants – manufactured, shipped and installed in one year. It can take decades just to install a nuclear plant. Think about that. I heard Bill Gates recently call solar “cute.” Well, that’s 17 GW of “cute” adding up at an astonishing pace.

He has an excellent rhetorical point, which highlights the brilliance of solar: This modular technology can be produced and installed at a pace far faster than most energy technologies. And businesses are getting amazingly efficient at doing so.

However, this comparison neglects the “value” of energy. Nuclear is a baseload resource; solar PV is more of a “peaking” resource. To compare 17 GW of global solar PV development to 17 GW of nuclear power plants ignores the fact that nuclear produces far more electricity than an equivalent solar PV plant.

With that said, solar brings a different kind of value to the grid. Not only can it be quickly deployed on existing infrastructure (warehouses, commercial buildings, residences) at rates that are orders of magnitude faster than nuclear, it offsets the most expensive peaking power plants – providing immediate economic value.

Here’s an amazing statistic told by Shugar: If only 500 MW of solar PV had been deployed in the northeast U.S. to help alleviate demand for electricity, the August 2003 U.S.-Canadian blackout wouldn’t have happened.  That blackout was the second largest in the world, causing between $7 and $10 billion in economic damage.

Notice in this chart how beautifully solar PV fits in to the highest demand periods in the middle of the day.

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“We are considerably lower than natural gas peaker plants,” says Dinwoodie. We’re also coming in lower than new nuclear and becoming lower than new coal. Gigawatts of these plants are being developed in months – not years or decades.”

Here’s their comparison between solar PV, natural gas peakers, nuclear and coal. The figures come from Lazzard, an international financial services firm that tracks energy data, and the Department of Energy.

You can see that natural gas peaker plants, which sit idling most of the day, are an expensive option for utilities.

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In sunny markets like California, solar is becoming competitive with large combined-cycle natural gas plants as well. According to Dinwoodie, there have been 4 GW of contracts for solar PV plants in California signed below the Market Price Referent – the projected price of a 500-MW combined cycle natural gas plant.

While that is a major milestone for the solar industry, we need to be careful about jumping to conclusions based on these figures. Some in the solar business fear that many developers are signing contracts too low – which means they get the contract, but investors may be hesitant to provide financing because they’re concerned the projects won’t pencil out. But the trend is clear: continued declines in the cost of building solar plants is allowing developers to compete with fossil energies in certain markets.

Here’s another important statistic: When SunPower built the 14-MW Nellis Air Force Base system in 2007, it cost $7 per watt. Today, commercial and utility systems are getting installed at around $3 per watt. In 2010 alone, the average installed cost of installing solar PV dropped 20%.

It would appear that solar PV is also cheaper than new nuclear.

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This year, the U.S. industry may install 2 GW of solar. The last nuclear power plant to come online in the U.S., Watts Bar 1, has a capacity of 1.1 GW – but that took 23 years to complete, not two years.

When looking at the time and cost of construction of new nuclear – as well as insurability issues – solar PV (in sunny areas) is already competitive with those plants. Again, I believe there is a big difference in the “value” of electricity from nuclear and solar PV given that they play such opposite roles; but these figures do tell an interesting story. (These figures were put together before the Fukashima accident.)

And what about coal – supposedly our cheapest form of energy? Dinwoodie and Shugar argue that solar PV is becoming competitive against that technology too.

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Over the last few years, 153 coal plants have been abandoned, in large part due to uncertainty over environmental regulations. Dinwoodie and Shugar believe that by the time a new American coal facility is built in the next 6 years, solar PV in the sunniest regions can be competitive with those plants.

Again, we have to recognize the differences in energy value. Resources like biomass combined-heat-and-power, geothermal and hydro may be better equipped to make up for the loss of coal. But if these projections are accurate – and experience suggests they are on target – getting solar PV competitive with coal would be a huge boost to the industry.

So what does all this mean? It means that the notion that “solar is too expensive” doesn’t hold up anymore. When financing providers can offer a home or business owner solar electricity for less than the cost of their current services; when utilities start investing in solar themselves to reduce operating costs; and when the technology starts moving into the range of new nuclear and new coal, it’s impossible to ignore.

According to SunPower’s Tom Dinwoodie: “The cross-over has occurred.”

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About the Author

is tryin' to help society help itself (and other species) with the power of the typed word. He spends most of his time here on CleanTechnica as its director and chief editor, but he's also the president of Important Media and the director/founder of EV Obsession, Solar Love, and Bikocity. Zach is recognized globally as a solar energy, electric car, and energy storage expert. Zach has long-term investments in TSLA, FSLR, SPWR, SEDG, & ABB — after years of covering solar and EVs, he simply has a lot of faith in these particular companies and feels like they are good cleantech companies to invest in.

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  • Fernando Osores

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    We are in the tropical rainforest of the Peruvian Amazon in the Bajo Madre de Dios river, a two-hour boat trip away from The city of Puerto Maldonado, in the buffer zone of the Tambopata National Reserve near the native community of Palma Real and Valencia Lake. Tambopata is part of a World Biodiversity Hotspot.

    very much appreciate having the information in your product and the possibility of a strategic alliance to develop pilot cabin amazonica.

    Fernando Osores Plenge, MD

    CIDEAM Ecohealth Director

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  • Anonymous

    Thanks for the nice comments (those are truly touching) and all the extra
    info! 😀

    & love that phrase, “welcome to the solar decade” — I think i’m going to
    start using that! 😀

  • tibi stibi

    with cost you can also take into account that when producing solar on your home, you don’t pay any profit to any company nor pay any taxes.

    electricity may cost 7 cents per kwh you will pay 20 or more when buying it.

    producing it your self will cost at this moment 13.9 cents but you will not pay any cent more!

    • Rob

      Tibi, in fact it can save you taxes. If you take $15,000 out of a high interest bank account or some other investment and use it to buy a solar array for your home that array will run your meter backwards and save you ~$1,500 per year on utility bills. That same money if left in an investment may have made you a similar return but you would then pay income and or capital gains tax on that return. You don’t pay tax on money saved.

    • Bob_Wallace

      You also lock in your cost of electricity for the next 20, 30, 40 years.

      If you produce electricity at 13.9 cents today you’ll still be producing electricity at 13.9 cents in 2032, 2042, we really don’t know how long panels last. So far over 30 years and going strong….

      Just for fun, 13.9 cents 20 years ago is now 22.9 cents. If we have similar inflation you’ll be paying way, way less than those still buying power from the grid.

      If you figured your cost per kWh based on a 20 year payoff for your panels then after the first 20 years your electricity is free.

      • And, with incentives, I think you have better than a 20-year payback in most places now…?

        • Bob_Wallace

          Let’s say you live in LA. You’ll get federal, state, and local subsidies. If you put those to work with the low installation rates that Open Network seems to be providing (<$4.50/W) you're looking at some sweet costs.

          Then if you've got third tier or time of use (TOU) billing you could be paying well more than $0.20/kWh during the sunny day.

          System payback could be rapid.

          I can imagine a ten year or less payback. That would give you at the very minimum ten years of free electricity. Quite possibly several decades of free electricity.

  • sola

    Now, we only need some cost advancement in stationary power storage and renewables would beat the s…t out of even traditional baseload power.

    • Anonymous

      seriously! i’m thinking of ramping up coverage of storage… not that that would make a big difference on its r&d, but bcs it is such a critical topic

  • sola

    How ironic!

    This would have not happened without Germany (their multi-decade long subsidies for solar PV)

  • Kevin

    We’re finally getting to the point where the question isn’t “how does cleantech compete with conventional energy” but “how does conventional energy compete with cleantech”!

    • Anonymous

      seriously, finally! 😀

  • WEllison

    This is all very encouraging news. Most would probably agree that utilizing renewable technologies is in the best interests of the planet. However, in the past, the question of comparale costs was a sticking point. Now, cost have steadily decreased, and a clear pv infrastructure has emerged. Using the psychotic, but inevitably increasing price of petroleum as its “fuel”, the PV train has left the station.

    • Anonymous

      for sure 😀

  • BlueRock

    Excellent research, Zachary. Thanks!

    Anyone who can’t see the writing on the wall now needs their eyes tested!


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