Sentence of the Day

by on April 10, 2014 at 10:09 am in Uncategorized | Permalink

Photovoltaic energy is already so cheap that it competes with oil, diesel and liquefied natural gas in much of Asia without subsidies.

More here.

charlie April 10, 2014 at 10:35 am

Given that oil and diesel are the two highest cost ways to generate electricity I hope solar can beat them.

LNG isn’t cheap either. Piped natural gas in but not present in much of asia.

NPW April 10, 2014 at 11:04 am

Oil, diesel, and liquefied natural gas are solar energy in a different form. Just sayin.

Curt F. April 10, 2014 at 11:47 am

My understanding is that you are 100% right for diesel and oil, but only 97 – 99% right for natural gas. Around 1-3% of the methane in natural gas is believed to come from inorganic chemical reactions in the Earth’s mantle / crust.

A Definite Beta Guy April 10, 2014 at 2:44 pm

LNG is not cheap…in Asia. It’s a market with extremely huge price discrepancies between regions, and the spot market is generally indexed to oil contracts rather than independently set by supply-and-demand. The Asian nations are ATTEMPTING to break the price-indexing, and when more LNG ships come on-line, the price will fall. Assuming the price will also fall when Japan finally turns the Nuke Plants back on and stops relying so much on LNG. But, yes, this sentence probably isn’t that shocking, compare solar to coal or nuclear variable cost to see whether solar can ACTUALLY handle base load needs.

Rahul April 10, 2014 at 3:04 pm

There also seems a fair bit of NG pipeline construction in progress. Will that drop LNG prices too, I wonder?

ChrisA April 10, 2014 at 10:02 pm

The LNG price is high because the cost of supply is high and demand is still rising. Especially in Asia Pacific which is the main demand center for LNG. And many traditional suppliers, such as NWS and Bontang are declining. The potential new sources of supply tend to be very high cost, like Browse where we are talking of more than $50bn in initial costs, or like Mozambique, where they will have to build an entire petroleum industry from the ground up. Although the US has plenty of gas at a relatively low cost, it is very expensive to liquefy this gas and then ship it half way across the world. Likely US, because of it’s open market structure is likely going to be the marginal supplier, will set a floor for world pricing. If you take the long term cost of gas in the US at $6/mmbtu, then add in the cost of the liquifaction plant ($3/mmbtu including losses) then the cost of shipping ($2mmbtu) then storage/regasification/transportation to final consumer (say another $/mmbtu) you are up to $12/mmbtu compared with the $14 to $15/mmbtu today, which is just under oil parity. So the price of gas in Asia will be between this band, probably at the higher end. The LNG business is a strange business since it is the one part of the energy business that remains on long term contracts. This is due to the decoupled way that gas is sold. Basically the big buyers are utilities that then sell on to small consumers and businesses. At the end of the day, they don’t really care about the price, they care about their margins. But they do care about being accused of overpaying (which is not quite the same thing as price). So there is massive collusion between the buyers in Asia and the sellers to maintain a price that does not make either side look bad.

In terms of solar taking market share from gas, I don’t think this is an issue for northern countries, such as China, Japan or Europe. It may shave demand in places like India, but not substantially since as the end of the day for every watt of solar produced you need to have back up fossil fuel for when the sun doesn’t shine. So the natural gas plants will still be built, and in most places, they won’t have the money for vanity projects.

libert April 11, 2014 at 10:31 am

Why should we compare solar to coal or nuclear variable cost? Shouldn’t we either compare total costs to total costs or variable cost to variable cost?

If we compare variable costs alone, solar will always win because its variable costs are zero.

JWatts April 11, 2014 at 9:18 pm

“If we compare variable costs alone, solar will always win because its variable costs are zero.”

Well yes, but you can’t ignore fixed costs or intermittency.

cheesetrader April 10, 2014 at 10:36 am

Great – I’m all for energy price competition. Now if the battery mavens can find a good and inexpensive means of storing for overnight and rainy day usage….

dan1111 April 10, 2014 at 10:41 am

The article is very, very short on evidence. At no point does it even present any form of comparison between costs of solar and other types of power generation.

Millian April 10, 2014 at 10:52 am

Costs of solar are plummeting. Costs of other energy are stagnating. What more do you need?

Z April 10, 2014 at 10:57 am

In the 1970’s they used to tell us that in school. The future was going to be lit by the sun!

And here we are.

J April 10, 2014 at 11:12 am

I don’t think that’s a fair comparison. In the ’70s solar costs were orders of magnitude higher than those of conventional sources, so an imminent solar revolution was clearly a pipe dream back then. But now? It’s very close to parity. Not to say it will happen immediately, but as our energy infrastructure turns over over the course of the next 30-50 years, I think it will be very important.

NPW April 10, 2014 at 11:06 am

Just because cost of x is trending down and the cost of y is flat, does not mean that the cost of x is less than y.

dan1111 April 11, 2014 at 1:44 am

What more do I need? Actual cost comparisons would be nice, given that this is the point of the article and is easily obtainable information. A quick look at total cost figures shows that solar is still a lot higher than traditional power sources. Even the article only claims it will be “within striking distance” of coal after further drastic drops in price.

Also, projections of solar prices continuing to drop in the future are speculative. It may be that the big technological gains have already been made, and the costs actually won’t fall much further; advances in solar panels can only cause the price to drop so far, because solar panels are only part of the cost of solar power; and a significant portion of the drop in prices may be caused by a supply glut rather than technological advances.

Rahul April 10, 2014 at 11:04 am

On net, isn’t what this guy is saying pretty bang opposite of what Vaclav Smil writes in his book? The impression I got from Smil was, forget solar, it isn’t going to make any spectacular dent in conventional fuel consumption.

So, who’s right?

NPW April 10, 2014 at 11:10 am

Transportation energy isn’t getting cheaper; photovoltaic cells are getting cheaper. It is a lab bench exercise that doesn’t work as well out in the dirt.

Ronald Brak April 10, 2014 at 12:10 pm

Rahul, Austin Texas is going has arranged to purchase solar power for about 8 cents a kilowatt-hour before subsidy. In Australia rooftop solar is the cheapest source of electricity available to households and that would be true even if our remaining feed in tariffs and Renewable Energy Target subsidy were removed. In a few years my state, South Australia, has gone from getting less than 1% of its electricity use from solar to 5%. Italy now gets 7.8% of its electricity from solar, Germany 6.2%, and Greece 5.8%. England has installed solar for about a pound a watt, Germany has installations as cheap as a Euro a watt, and India has installed solar for about $1.33 US a watt. Using a 5% discount rate that Indian solar produces electricity at under 5 cents a kilowatt-hour. (I don’t know what the correct discount rate for India is, but a higher discount rate will also increase the cost of other generating capacity.) Solar PV requires no water for cooling and when put on rooftops requires no land and no extra transmission capacity and also has the advantage of competing with retail electricity prices instead of wholesale. And perhaps most importantly of all it cuts fossil fuel use reducing greenhouse gas emissions. So while I don’t know what the actual end point will be, it is clear that the world is going to end up with a great deal of solar capacity, mostly because it is competitive with other sources of electricity.

brad April 10, 2014 at 2:15 pm

Solar isn’t base load. The only way you could possibly go more than ~20% solar is if you put in huge amounts of expensive, dirty, storage capacity*. Peak solar generation does tend to track peak demand, so that’s good for profitability given current the current supply-demand picture, but if you get overcapacity in that space that could flip.

*The article talks about battery breakthroughs that are just around the corner. If you believe that, I have a fusion power plant to sell you.

Rahul April 10, 2014 at 2:27 pm

@brad:

Since I mentioned Vaclav Smil it’s a good bet that I’m not buying your fusion plant. :)

Rahul April 10, 2014 at 2:31 pm

OTOH, hitting 20% itself would be HUGE. So, if storage problems do kick in badly after that threshold, that’d be a major achievement by itself.

JWatts April 11, 2014 at 9:24 pm

Indeed, 20% would be huge and a boon, but until the price of energy storage comes down substantially, there won’t be much beyond that. Though, the figures I’ve seen, usually say that it’s about 20% for wind and 10% for solar and a little under 30% for both.

Ronald Brak April 12, 2014 at 12:09 am

JWatts, here in South Australia we get about a third of our electricity from wind and solar and we are rapidly expanding the capacity of both. There is certainly no 30% limit and the economic limit all depends on relative costs. Our solar capacity is expanding rapidly and now supplies about 5% of the state’s total electricity use. It’s all rooftop solar and the interesting thing is that since it competes with the retail price of electricity people will still have an incentive to install it even though the average wholesale price of electricity may fall quite low and this may push the percentage of electricity we get from solar up quite high, particularly as demand shifts to take advantage of cheap daytime electricity. But what will happen depends on just low renewable costs go and how externalities are priced in.

JWatts April 12, 2014 at 5:19 pm

“JWatts, here in South Australia we get about a third of our electricity from wind and solar and we are rapidly expanding the capacity of both. ”

Well, I certainly like that to be true, but I rather doubt it. Do you have an actual source that South Austrailia gets more that 1/3rd of it’s power from wind and solar And exporting to other areas during peak periods, but counting that as your own power doesn’t count.

Ronald Brak April 12, 2014 at 8:46 pm

Jwatts, here’s a link to an SA gov page showing generation by fuel type:

https://www.sa.gov.au/topics/water-energy-and-environment/energy/energy-supply-and-sources/sa-electricity-supply-industry

Note the information given there averages over a year old. Rooftop solar capacity has increased by over a third meaning we now get about five and a quarter percent of our electricity from solar. And the state’s largest wind farm is under construction and should be finished by around the end of the year. I would presume it is already supplying some electricity since there isn’t much point in having errected wind turbines sit idle.

Ronald Brak April 12, 2014 at 8:52 pm

JWatts, I didn’t want to put multiple links in my previous comment in case that caused it to get caught in a spam filter. Here are a couple more. If you want to download the Australian Electricity Market Operator’s report on South Australia for 2012-2013 you can download the PDFs here:

http://www.aemo.com.au/Electricity/Planning/South-Australian-Advisory-Functions/South-Australian-Electricity-Report

And here’s an article on solar in Australia:

http://reneweconomy.com.au/2013/people-power-rooftop-solar-pv-reaches-3gw-in-australia-99543

And things change quickly soo the information there is a little dated too. If installations have continued at last year’s rate, South Australia now has about half a gigawatt of rooftop solar.

Ricardo April 10, 2014 at 9:56 pm

The key paragraph buried inside this opinion piece is “A McKinsey study said the average cost of installed solar power in the US across all sectors has dropped to $2.59 from more than $6 a watt in 2010. It expects this fall to $2.30 by next year and $1.60 by 2020. This will put solar within “striking distance” of coal and gas, it said.”

So solar is still more expensive than natural gas and coal and is expected to remain so for at least the next five years. That isn’t quite as impressive a headline given the reliance of countries like India and China on coal. Moreover, the bigger problem with solar is storage. Solar might eventually help India and China keep the lights and air-conditioning on in office buildings during the day but it is not going to replace power plants that rely on fossil fuel, nuclear, or hydro-electric energy.

JWatts April 11, 2014 at 9:27 pm

Even that is limited to some degree. You can cut out the peak, but if you try to go below the peak and start forcing other plants to idle (coal or gas) they still burn a lot of fuel and generate a lot of additional maintenance by cycling the boilers.

Ronald Brak April 12, 2014 at 12:32 am

JWatts, as demand for grid electricity has fallen in Australia we haven’t made existing fossil fuel plants idle more. What has happened is that as reduced demand has lowered wholesale electricity prices, the generating capacity that is no longer profitable gets shut down. And now that the daytime peak is being eliminated we have more hydro power and pumped storage available to meet the evening peak. And as daytime electricity prices fall it will become profitable to charge our existing pumped storage capacity during the day instead of just at night.

wheatstone April 10, 2014 at 11:22 am

The article is complete nonsense. There are no facts presented and the chosen terminology is highly deceptive.

Simply adding more solar nominal “capacity” does not mean more ‘available’ electricity.
The sun don’t shine at night, nor is it strong enough in most daytime to meet the ‘advertised’ (nominal) power output of solar cells. A 100 KW fossil-fuel generator provides 100 KW all the time — but a 100KW solar array only provides a small fraction of 100KW some of the time.

There’s no way solar is currently competitive with conventional commercial power generation, in a fair comparison.

fwiw April 10, 2014 at 12:32 pm

fwiw, we use less power at night, too.

Albigensian April 10, 2014 at 1:59 pm

And lets nor forget the additional costs associated with solar.

Because it’s intermittent (and seasonal), there’s a need for backup sources. Utility-scale storage really isn’t here yet but even if it were available, if the solar is outside the tropics there will be significant seasonal variation that’s not going to be solved by storage.

And because it’s low-density and often located far from where it’s used, there’s additional capital cost for transmission lines, as well as significant losses in those lines.

All of these costs should be figured when comparing the cost of solar with fossil-fuel generation, yet they’re often “forgotten” by promoters.

And then there’s nuclear. There’s certainly been advances in nuclear power plant design, and there’d be more if more were being built.

Promoters can be annoying, because even when they tell you the truth it’s often far from the whole truth.

collin April 10, 2014 at 5:44 pm

Here in Cali:

1) Get ready the holy ‘Net Metering’ Wars in 2015 – 2016. (Could be a minor issue Prez election 2016.) Right now the power companies must reimburse solar buyers for the excess power generated during the day. At what price of reimbursement (Retail, Wholesale, Low end wholesale) will be the issue. Cali power companies are getting NAILED because with solar day rates are so much higher than night time rates from past pricing models.

2) The local nuclear power plant is shutting down for various safety violations. To be honest after the fukushima earthquake, Daiichi nuclear disaster makes nobody comfortable with any plant in the state.

Ronald Brak April 10, 2014 at 8:49 pm

Dan, here’s an Australian comparison for you: The average cost of installing rooftop solar in Australia is $1.85 US a watt or about $2.50 US before our Renewable Energy Target subsidy. A 25 year warranty on solar panels is common here. So with a 25 year system life, allowing for cost of inverter replacement and with a 5% discout rate, solar power will produce electricity at around 12 US cents a kilowatt-hour without subsidy. A 5% discount rate is reasonable for many Australian home owners. If you are one of the unfortunate Australians who gets no feed in tariff or any payment for the electricity you send into the grid and you self consume half of the electricity your solar panels generate, this effectively doubles the cost of the electricity generated to about 24 US cents a kilowatt-hour. This is still significantly less than the average retail price of electricity in Australia. On my last electricity bill I was charged 31 US cents per kilowatt-hour, not including supply charges. So even in a close to worse case scenario rooftop solar is still the cheapest source of electricity available to most Australian households. Germany installs rooftop solar at under $2 a watt without subsidy, so Australian installation prices getting down to at least that level are a given as there is nothing magical Germany is doing that we can’t do. This this would reduce the price of solar electricity to under 10 US cents per kilowatt-hour. In the sunnier parts of Australia it would drop the cost of solar generated electricity to about 7 US cents a kilowatt-hour. The cost of generating electricity from fossil fuels in Australia was about 4 US cents a kilowatt-hour before our carbon price was introduced and is now back down to about that level while distribution costs are around 22 US cents a kilowatt-hour. While most countries have more reasonable distribution costs, solar will still be competitive with other sources of electricity in many regions.

dan1111 April 11, 2014 at 2:09 am

I am convinced that rooftop solar might be a good idea for individual homeowners.

However, its systemic cost is another issue. How much does your solar installation reduce the need for traditional capacity? Let’s say a 100W installation eliminates the need for 40W of coal power (I think this is a generous assumption). Then the true cost of 100W of solar would be the solar costs plus the costs of maintaining 60W of idle coal power generation capacity. The actual fuel and operation are a tiny portion of coal costs, so systemically you would still have most of the costs of 60W of coal. You as an individual consumer don’t feel this when you install some solar panels, but over time it will push the cost of the traditional power you need as a backup even higher.

Also, rooftop panels can only solve some percentage of power needs. For the rest, solar plants would be needed, with the resulting distribution costs.

dan1111 April 11, 2014 at 3:01 am

Note: I am not saying rooftop solar does not make sense. It seems promising. However, I would like to see systemic analysis of its potential. How much of power needs can be met by it? What is the true system cost of rooftop solar as it gains more market share?

Ronald Brak April 11, 2014 at 3:25 am

Dan, new renewable capacity in South Australia, both wind and solar, have cut our wholesale electricity prices by about half and solar has been reducing wholesale electricity prices across Australia including in states with minimal wind power. And since solar meets our peak demand it lets us retire other capacity as we have done in South Australia and other states. And lower daytime electricity prices means more of our existing hydro and pumped storage capacity is reserved for the evening so solar has helped to lower wholesale prices even after the sun sets. Now in a developed country, if distributers fail to properly predict the effects of expanding rooftop solar, it can result in a transmission infrastructure overhang, but solar power only provides competitively priced electricity. It doesn’t make people any smarter.

As for rooftop panels only providing a percentage of power needs, Australia’s rooftops could provide all of Australia’s daytime electricity demand. In fact, if we were willing to build the storage capacity, which we’re not, rooftop solar could meet Australia’s entire electricity demand.

Komori April 11, 2014 at 4:04 pm

I live in Austin, and got a quote for solar 6 months ago when the company I work for was offering an extra, over Austin Energy, incentive. The price, after all the incentives, still worked out to 4.28/watt. Panel prices were not the major problem. Not sure what’s going on in the US to drive prices up so much, but the ROI for much of the US is still not very good on solar.

Of course, the power companies doing bulk installs probably have very different numbers to work with.

Ronald Brak April 11, 2014 at 7:37 pm

Komori, that’s a pretty lousy price by Australian standards. It’s close to twice what we would pay for an average install in Australia before subsidy. I’d shop around. I’ve heard of installations being done in the US for close to Australian prices. Hope you can find a reasonably priced installer in your area. And you’re certainly right about large installs being cheaper. I don’t know what the actual figures are but I would guess some utility scale solar is currently being built in the US for $2 a watt. In Europe utility scale solar can be done for a euro which is about $1.40.

JWatts April 11, 2014 at 9:40 pm

The numbers you site don’t match up with widely reported prices:

“The bulk of the price of going solar is now the “soft costs” (installation, permitting, etc.) rather than the solar panel cost. Again referencing the latest US Solar Market Insight report, the average installed cost of a residential solar panel system was $4.72/watt.
Read more at http://cleantechnica.com/2014/02/04/current-cost-solar-panels/#34wczwopm4WwIYym.99

JWatts April 11, 2014 at 10:05 pm

Oops, you said utility scale solar. Yes, $2 per watt is a little low, but not by too much.

“Nutting also pointed out that in Q2 2013, the national average installed cost of utility-scale PV solar was $2.10 per watt, according to the GTM Research U.S. Solar Market Insight report.”

Al April 10, 2014 at 10:47 am

Here’s another quotation from the story:

Utilities that fail to adapt fast will face “disaster”. Solar competes directly. Each year it is supplying a bigger chunk of peak power needs in the middle of the day when air conditioners and factories are both at full throttle. “Demand during what was one of the most profitable times of the day disappears,” said the report. They cannot raise prices to claw back lost income. That would merely accelerate what they most fear. They are trapped.

I wonder how this dynamic will impact the Los Angeles Department of Water and Power. There, the unions and their city council lackeys control the rates charged to customers and have created above-market compensation packages for themselves. Maybe it will become just “the Department of Water.” Or maybe the city will regulate and tax the hell out of solar panel installations.

foobarista April 10, 2014 at 3:00 pm

Forget it, Jake; it’s Chinatown.

Al April 10, 2014 at 4:30 pm

you’re right.

:-)

FWIW, I guess the city will find a way to regulate and tax the installation of solar panels so that the DWP’s electricity prices are competitive.

dead serious April 10, 2014 at 10:51 am

Early on, detractors raised concerns about the amount of land required to house solar panels. Citations were that there isn’t enough space to collect the amount of energy needed to power the country’s grid.

Since I know nothing of the technology and there are people who frequent this board who work in this field, is that less of a concern?

brickbats and adiabats April 10, 2014 at 11:26 am

Land use is chiefly connected to efficiency and capacity factor. The former has gotten a lot better; even the really cheap stuff now beats what we could produce commercially forty years ago. The latter is still a problem, obviously, because the sun doesn’t shine everywhere. It’s also something of a red herring given the amount of surface area on buildings and such that can be retrofitted at relatively low cost and greater economic benefit compared to dedicated utility-scale PV. Distributed generation is already economical in many places without much in the way of solar resources since it competes directly against the _delivered_ cost of electricity rather than the wholesale cost.

Citing Asia is a little iffy for this article, though, because petroleum products tend to be much more expensive in Asia than in the US, and in some cases more expensive than in Europe.

Rahul April 10, 2014 at 11:29 am

One other factor in the third world is atrociously bad grid uptime. Considering that, solar might get some additional selling points.

brickbats and adiabats April 10, 2014 at 11:38 am

Definitely true – forgot about that.

Rahul April 10, 2014 at 12:02 pm

I checked the stock price charts for First Solar & Suntech (these seem the two biggest solar module manufacturers) & those seem on a nosedive.

What gives? Market doesn’t share an enthusiasm for solar?

brickbats and adiabats April 10, 2014 at 2:01 pm

I don’t follow the solar PV market closely. I was under the impression that everyone was still on the tail end of a punishing period of capacity rationalization that’s been going on since 2009, and stock prices probably reflect that. I also have anecdotally heard that Chinese firms especially prefer cutthroat price competition rather than shutdowns in the face of the bust part of a boom-bust cycle, which might explain how dilated this bust has been.

Either way it’s pretty clear that solar PV manufacturers are hurting and the consumer is benefiting from lower prices as a result.

libert April 11, 2014 at 10:36 am

Rahul: falling prices for solar panels reduce profits of solar manufacturers.

Albigensian April 10, 2014 at 2:10 pm

A figure to start with is the solar constant. It’s the amount of energy from the sun falls on a square meter perpendicular to the sun in space. It’s about 1,361 watts (yes, this “constant” does vary throughout the year as the Earth’s orbit is not perfectly circular).

Of course, the amount that reaches the Earth’s surface is reduced by the atmosphere, and the sun will never be directly overhead unless it’s noon and you’re in the tropics, and devices to convert the sun’s energy to electricity will never be 100% efficient. But, that 1,361 watts/m^2 is a place to start.

Alistair April 10, 2014 at 3:24 pm

There is certainly enough land (solar PV is the most land-efficient of the renewables), but you have to cover a lot of desert and built high voltage grid to support it. Even then you’ll need gas back-up for the despatch problem.

Ronald Brak April 11, 2014 at 2:24 am

Alistair, Australia’s solar capacity is almost entirely point of use. This means it takes up no land and requires no new transmission capacity. In fact, by reducing peak demand it frees up exisiting transmission infrastructure. And because it reduces our peak demand it allows us to close down other generating capacity. For example, here in South Australia it has let us mothball one of our two coal plants and the other now only operates in the hotter half of the year when electricity prices are high enough for it to make a profit. However, the difference between winter and summer electricity prices is decreasing thanks to our expanding solar capacity, so it may not be long before our remaining coal plant is also shut down.

chuck martel April 10, 2014 at 11:51 am

Ambrose periodically goes on a manic-depressive flight of optimism. That’s just him.

” Yet the possibility of global energy deflation raises a quandry: should the country lock into more nuclear power stations with strike-prices fixed for 35 years? Should it spend £100bn on offshore wind when imported LNG might be cheaper long hence?”
Whose money is he talking about spending? Who makes the decision?

Alistair April 10, 2014 at 3:22 pm

But of course, those are the qualities we love him for. :-) I think all of us regular readers take him with a pinch of salt.

dead serious April 10, 2014 at 2:01 pm

Why do I feel like even if everyone personally invests the $10k or whatever to install solar panels on their roofs, we’ll still have to pay electricity providers/delivery companies the same amount of money or more each month (or more)?

They’ll just raise per unit charge and extract their pound of flesh that way.

Handle April 10, 2014 at 2:22 pm

There is a lot of talk about the expectation that solar prices will keep going down, down, as if they are transistors. No, there is no gain from miniaturization, or anything like that.

There are two major costs to ordinary photovoltaics. One is the silver price, because the conductive backing is silver. And silver is down over 55% from it’s highs from three years ago. Two is the energy cost of purifying and smelting the silicon to make the ingots. You get nice SiO2, heat it up to a very high temperature, put in some carbon to absorb the oxygen which gets bubbles off at CO2, and then you’ve got to dope and grow the crystal. Just like smelting Iron or Alumnimum or Cement, that takes lots and lots of cheap energy. And China has cheapest coal energy.

What has made the price come down is not some kind of new exotic chemical formula or a new printing method or a new mirror shape. That is, the price declines are not due to technical progress and should not be expected to continue. It is the price of the plain vanilla cells that has come down, and they have come down because China has been using its comparative advantage in having the world’s cheapest coal-based energy to lower the price of the semiconductor-quality silicon itself. It built a gigantic capacity to make this stuff, just as the appetite for it dried up in the global financial crisis, generating a glut while silver prices also fell.

So, yes, for the moment, photovoltaics are cheaper. But also, a truly huge amount of pollution is generated in their production and transportation when it happens in China. And in the end, we are just talking about the cell costs, not land or installation or maintenance or the problem of meeting on-demand loads with unreliable supply. Which means you can’t get rid of the large, non-solar, non-wind base-load plants that still provide the vast bulk of power supply.

collin April 10, 2014 at 4:03 pm

When is Tyler going to write his solar response? I have waited for Marginal Revolution to decide whether solar can take over for electricity generation over the next 50 years. (Liberals are too easy to say “Yes!” and Conservatives say “Drill, Baby, Drill”)

1) At this point, in California & Hawawii, we don’t need subsidies to compete with the electric companies. This will be true other parts of the nation as well.

2) However, we need high ‘net metering’ reimbursements to make it economical. (I am paid for the excess power generated during the day to offset the costs at night. I have solar in a Cali desert city. Also we are up to ears in local print, radio and TV ads on different solar installers. They the job growth in Socal.)

3) How do the electric companies deal with solar which may bust their capital intensive model and forever falling marginal costs? The more people go to solar, the more expensive electric generation becomes. Also solar does not create power evenly throughout the day and companies could have too much power generated at 1:00 PM.

4) In 20+ years, is it possible will battery system or electric cars running all day off solar. (Yes this is science fiction.

CR

Bjartur April 10, 2014 at 5:42 pm

Does anyone have insight on the “helped by the US military” comment in the article?

Ronald Brak April 10, 2014 at 7:51 pm

The US military has invested a lot in solar for logistical reasons as solar power reduces the reliance upon either transported diesel or the local grid. Also, it can also save a lot of money. And I imagine that reducing the US’s reliance on imported oil would indirectly help to protect the country.

Dan Hanson April 10, 2014 at 6:15 pm

The shell games and shenanigans played when making claims about the costs of various energy sources make articles like this nearly useless. ‘Grid parity’ is often claimed for alternative energy, but when you dig into the numbers you find that the ‘parity’ they are talking about is for retail pricing, and often includes an assumption that a carbon tax will be applied to the fossil fuel, or they price ‘externalities’ of traditional energy sources in unrealistic ways.

These estimates also don’t consider the cost to the grid of pushing unstable, unreliable power into it from solar feed-in. Adding 1MW of power from retail consumers feeding power back into the grid does not mean that the grid can scale back its fossil power by 1MW. It may just mean that power is going to waste, or that the other power plants have to lower their duty cycles and run less efficiently. Since you still need all those fossil plants for the times when the sun isn’t shining, feeding in solar power may must make the grid less efficient overall.

So how can we evaluate if solar is truly cost-effective? The easiest way is to simply track the price of electricity in countries as they add more solar to their power mix. You have to include any subsidies, taxes, and tariffs as well.

When you do that, I think you’ll find that at the current time, places that have added solar capacity have seen electricity rates increase, and sometimes quite substantially. I don’t know of any place that has seen electricity prices fall or stay the same as electrical power has been added to the grid.

Rahul April 10, 2014 at 9:21 pm

Even if per kWhr cost of conventional goes up due to lower duty cycles, that can still be a net plus, right? If solar is adding a decent number of lower cost kWhr units to the mix?

A lower efficiency fossil source is still OK if total fuel consumption decreases?

Tom Donahue April 11, 2014 at 3:43 am

>I don’t know of any place that has seen electricity prices fall or stay the same as electrical power has been added to the grid.

There is Germany, where the wholesale price of electricity has collapsed because of renewables. And many other places where wholesale and retail prices have been unaffected. Not exactly surprising, since the fuel is free and the investments are comparatively modest.

> You have to include any subsidies, taxes, and tariffs as well.

Sorry, but that sounds like adding ad hoc factors until you get the result you want. If we are going to do that, do we get to add the cumulative infrastructure decisions and subsidies that the fossil fuel industry has enjoyed for the past century? How about externalities that lower your standard of living without showing up on your electricity bill?

anon April 11, 2014 at 9:52 am

I have no dog in this fight, but,

“If we are going to do that, do we get to add the cumulative infrastructure decisions and subsidies that the fossil fuel industry has enjoyed for the past century? How about externalities that lower your standard of living without showing up on your electricity bill?”

Definitely “no” to the first. Any reasonable analysis has to be forward looking. It doesn’t matter how fossil fuels got their present advantage.

Maybe “yes” to the second, although it’s a tough case to make. It’s not at all obvious solar power is meaningfully helpful including externalities (like pollution in manufacturing, installation and maintenance deaths).

Tom Donahue April 11, 2014 at 5:00 pm

“It’s not at all obvious solar power is meaningfully helpful including externalities (like pollution in manufacturing, installation and maintenance deaths).”

Well, yes, but if you have two numbers, x and y, where x>0 and y>0, it doesn’t follow that x=y.

This is a good exercise for a back-of-the-envelope calculation. As a crude measure, let’s use weight. Estimate the tons of solar panels (x) produced in 2012. Now estimate the tons of coal plant (y) that would be needed to produce the same number of megawatts. I think it’s likely that x<y, but for the sake of argument let's assume that x=y. Crude but not obviously wrong. It takes a lot of energy to produce a ton of semiconductor-grade silicon, but it also takes a lot of energy to produce a ton of steel or concrete.

But we aren't finished yet. There's fuel. Tons of fuel for solar panels is 0, so xf=0, while yf is some very large number, representing tons of coal that has to be dug up and transported halfway around the world (or at least across a large country like the US or China). Every year for 20 years, assuming 20 years of operation, so the real number is 20*yf.

And then there are emissions, which again are 0 for solar panels (xe), but very large for coal (ye).

This gives the equation x+xf+xe=y+yf+ye. Is that true? No, I think one side of that equation is likely to be from 10^2 to 10^3 times larger than the other. Just as a back-of-the-envelope calculation, we are talking about entirely different orders of magnitude here.

Ronald Brak April 10, 2014 at 10:21 pm

Rahul, what actually happens is the least profitable generators tend to leave the market. Australia now has many gigawatts of coal power in mothballs as a result of decreased demand for grid electricity. When demand for grid electricity decreases they don’t reduce the output of every coal plant, they shut down the ones that are losing money. Since it’s the older, less efficient coal plants that tend to be shut down, renewable energy should actually be decreasing the average amount of CO2 emitted per kilowatt-hour of electricity produced from coal in Australia.

TallDave April 13, 2014 at 12:48 am

Sure, in calculators. In large-scale production, solar can compete with $200/bbl oil, but not with coal or nuclear or hydro.

Michael Liebreich, from Bloomberg New Energy Finance, says we can already discern the moment of “peak fossil fuels” around 2030, the tipping point when the world starts using less coal, oil and gas in absolute terms, but because they cannot compete, not because they are running out.

That’s already nonsense. Fossil fuels are expensive today because they are running out. We’ve used up a lot of the cheaper oil, like the $2/bbl oil from Ghawar. Fracking could never compete at $20/bbl but is great at $100/bbl, which is why it’s only coming online now.

Ronald Brak April 13, 2014 at 1:43 am

TallDave, point of use solar already outcompetes coal and other utility scale generating capacity here in Australia. And I would mention that utility scale solar in Australia at US costs would outcompete new fossil fuel and definitely new nuclear capacity, except that rooftop solar may lower daytime electricity prices so much that we never get more than a token amount of utility scale solar.

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