Solar “Learning Curve” & “Golden Goal” (Bloomberg Charts)

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Along with the fun charts just released by SEIA and GTM Research yesterday, Bloomberg just released some pretty awesome ones that a friend on Google+ shared with me.

solar power price drop

The first, above, is on the solar ‘learning curve’ or how much solar prices have dropped with increasing installations. Here’s what Bloomberg had to say about this:

Solar power has reached a long-sought industry goal: silicon modules at a cost of one dollar per Watt of capacity. This chart shows the industry’s learning curve. For conventional panels, the price drops 24 percent for every doubling of total installation. For thin-film panels, made by First Solar, the cost falls 13 percent when capacity doubles.

Bloomberg New Energy Finance’s solar module price index stands at $1.03 per watt, a 45 percent price drop since March 2011, but up from the end of December 2011. Global manufacturing capacity is far ahead of demand — the reason why Solyndra went bust. The average stock price drop among top solar module makers was 65.6 percent in the last year.

If this continues, as everyone not ideologically or financially opposed to solar power thinks it will, solar power will be cheaper than fossil fuels in a very short time not even taking very important health, grid security, and environmental costs of other options into account.

Next, Bloomberg has one on the so-called “golden goal” of grid parity (note: this is an interactive image on Bloomberg that is fun to play with). For the U.S. market, this is something John Farrell recently wrote on in depth, showing that some locations have already hit grid parity and discussing the complexities of grid parity. As I think should be noted every time this comes up, if the true value of solar (or full costs of other energy sources) were taken into account and prices reflected that, solar is already competitive with or cheaper than other power options. Similarly, if the proper lifespan of solar panels was used by analysts when determining solar prices, the graph above would look a lot different. However, since our politicians and markets are still unable to price power options appropriately (and analysts still use ridiculously conservative 20-year lifespans for solar panels), “grid parity” using standard methods of analysis is critical to scaling of solar power.

Here’s more from Bloomberg on this second image above:

Solar electricity providers have reached what experts call the “golden goal” of grid parity, when putting solar modules on the roof to replace electricity purchase from the grid is a good investment for consumers.

Several countries that have high power prices are already there: Germany, Denmark, Portugal, Spain and Australia. Brazil is also above the 6% level, but consumers may require higher returns on investment in a developing economy. Japan, France, Greece and Turkey are expected to be there by 2015, and by 2020 even the US average price is high enough to justify investment, even without the 30 percent investment tax credit subsidy.

Again, note that this is without subsidies, such as the federal tax credit and various state and city subsidies in the U.S.

Interest images from Bloomberg. Your thoughts?

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Zachary Shahan

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8 thoughts on “Solar “Learning Curve” & “Golden Goal” (Bloomberg Charts)

  • so the easiest way to achieve the golden goal is to increase your electricity cost. The more expensive your electricity is the sooner you will reach grid parity with solar. What a totally rubbish metric.

    • As a fan of higher gasoline and electricity prices, I hope to reduce the toxic impact from fossil fuels. This article lets me know there will be unexpected/undeserved benefits if energy prices get high enough. Essentially there will be a transition from toxic energy to nontoxic energy. And then energy prices will start to fall.

      The universe is telling us that despite our thoughtless eco-crimes there is still a route to an energized optimistic future. Doesn’t seem like rubbish to me.

    • Not a rubbish metric actually.

    • 1st of all: higher electricity costs actually better represent the societal cost of that electricity. and allow the true value of solar more room to shine through.

      Furthermore, as noted by Thomas above, some countries have decided to put more tax on things the country doesn’t want (i.e. pollution) and less on the things the country wants (i.e. income). The U.S. and other countries that haven’t gone this route would do well to shift its focus. One conservative economist has recommended this heavily, and I think the U.S. should listen.

      I, for one, would much rather cut my income taxes in half and increase my electricity costs accordingly.

  • Countries like Germany, have been shifting taxes away from labour / productivity more towards consumption taxes.
    That’s especially true in terms of energy consumption taxes, because energy use is a strategic risk considering increasing dependencies. As a nice side effect: Increased per unit price of energy => make renewable energy investments sooner profitable.

    Other countries use alot of % of GDP to keep per unit energy costs low… for example the US, by means of subsidies & accepting externalities from pollution (damage to health, argriculture, forrestry, …)


    On the article:
    I think Japan has also already reached grid parity… the prices for electricity have increased significantly since 3/11 2011… and I hope for a solar boom with the FiT taking effect in July.
    Solar panels certainly are being promoted in every electric store since last year….

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