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New Mexico Utility Agrees To Purchase Solar Power At A Lower Price Than Coal

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"New Mexico Utility Agrees To Purchase Solar Power At A Lower Price Than Coal"

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The economic viability of solar power is advancing rapidly. It’s actually already more than competitive within certain markets, and the price of solar panels saw a precipitous decline over the last four years.

In fact, solar technology has been advancing so rapidly that analysts have had trouble keeping their models up to date. When the Electric Reliability Council of Texas revised the circa-2006 assumptions about the state of technological development in its economic models, it found massive increases in the economic viability of wind and solar power, making them competitive with natural gas within the state over the next twenty years. Former Energy Secretary Steven Chu predicted in 2011 that, along with wind, solar would be no more expensive than oil or natural gas by the end of the decade.

The latest evidence of solar power’s rise comes via Bloomberg: El Paso Electric Co., a southwestern utility, has agreed to purchase electricity from a New Mexico solar project owned by the solar panel manufacturer First Solar, for a price lower than the going rate for coal:

First Solar bought the 50-megawatt Macho Springs project from Element Power Solar, according to a statement yesterday. El Paso Electric Co. (EE) agreed to buy the power for 5.79 cents a kilowatt-hour, according to a Jan. 22 procedural order from the New Mexico Public Regulation Commission.

That’s less than half the 12.8 cents per kilowatt-hour average price for new coal plants, according to data compiled by Bloomberg. Thin-film photovoltaic power typically sells for 16.3 cents a kilowatt-hour, according to Bloomberg New Energy Finance.

The price would be “the lowest solar power purchase agreement price we have ever seen,” Aaron Chew, an analyst at Maxim Group LLC in New York, said in an e-mail. It’s less than half the price that First Solar will get for its Antelope Valley, Topaz, and Agua Caliente projects, he said.

The Macho Springs project is just the latest in over 50 megawatts worth of solar projects First Solar has built in New Mexico since 2011, and the company is slated to install another 21.5 megawatts by late 2013. First Solar even developed the first solar project to reside on public U.S. lands: the 50-megawattSilver State North installation outside of Primm, Nevada, which began generating electricity this past May. And its 250 megawatt installation in Yuma County, Arizona was the largest solar plant operating in the world as of October, 2012.

First Solar is also the largest maker of thin-film solar panels in the world, and its panels — which will be used in constructing the Macho Springs project — boast the smallest carbon footprint and shortest energy payback time of any solar technology currently available.

Zooming out to the larger picture, analysts anticipate American solar power will soon account for 10 percent of the world market, given the industry’s 70 growth rate over the course of last year. Installations of solar panels surged in 2011 as industry analysts predicted the price of solar-generated electricity would quickly come to rival that of coal. By December 2012, U.S. solar installations had increased 116 percent over the same period in 2011, bringing sufficient capacity to power about half a million average American homes. And according to a census by the Solar Foundation, the sector currently employs over 119,000 Americans — an increase of 13,872 workers over 2011.

Update

An important caveat: One factor that’s bringing down the price of the Macho Springs plant’s electricity is the array of federal and state subsidies going to solar power. For example, New Mexico’s state production tax credit will add something between 2.5 to 2.7 cents per kilowatt-hour to the system’s revenue for its first decade. There’s also a 30 percent federal investment tax credit to consider. Add all that in and it brings Macho Springs’ price alongside that of comparable projects in California, which generally clock in a bit above 8 cents per kilowatt-hour — though still lower than Bloomberg’s average price for new coal plants.

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71 Responses to New Mexico Utility Agrees To Purchase Solar Power At A Lower Price Than Coal

  1. Paul Magnus says:

    Hang on dont they use oil to make solar panels?

    • ToddInNorway says:

      It depends on where the factory for the panels is located and what the source of electricity is there. Most of the energy input for creating a thin film PV panel is in the form of electricity. However it is true that moving the panels to market and installing them requires motorized vehicles which use FF. But this is utterly insignificant in the overall energy balance of the life cycle of the panels. If the panel factory is locatedin the NW US, it is likely powered mostly by hydroelectric with some input from wind, some coal and perhaps some nuclear.

    • Daniel Coffey says:

      Yes, the current energy extraction paradigm requires the use of what is available, which is oil, coal, hydro, nuclear, bio, geothermal, etc. to provide exogenous energy for the manufacture, transportation and placement of the panels. However, when you look at the overall life-cycle, including discovery, extraction, transportation, refinement, storage, and combustion of fossil fuels, solar PV is remarkably superior. So much so that it challenges the paradigm of scarcity which now drives markets in one-time use consumables like oil and coal.

      • Restricting fossil fuels to strategic uses like manufacturing renewables makes a lot of sense. It treats the oil as a capital endowment that used only to bootstrap an investment with a better return, like PV. It’s the highest use of the oil.

        Someday our energy infrastructure will reach that critical mass where renewables can be reliably used to make more renewables, but until then, I’m okay with this model.

        There are many, many parts of the economy where oil is being burned solely because it’s economically convenient in the absence of a carbon price. It’s like dipping into the principal of a trust fund to pay for a hamburger. Fueling cars, for example. We could reserve oil to build very energy-efficient electric vehicles that can be fueled at least in part by solar and wind.

        Once we have a legitimate carbon price, a lot of this will be obvious.

        • Daniel Coffey says:

          I agree with the underlying framework of that concept. It has the fundamentally practical reality that we must build our way out of the current state of affairs to achieve a better future. And the future can be significantly better if we don’t wait too long to deploy these technologies.

          As for a price on carbon, I am actually against that approach given the reality of how it will play out.

          Our money and resources must be focused directly on solving the challenge we face, not being diverted or diffusely drained away from deploying new technology. Diverting revenue streams is the usual political game, one which we cannot afford to engage in at the present time. It’s not that there are not great and important uses for money and taxes, but at the moment we need to push hard to deploy the technology needed to displace fossil fuel combustion and its byproducts.

          Never forget that the minute you place a tax on carbon, carbon use will implicitly be made more desirable to those in government whose jobs depend on money – everyone in government. The government will be aligned with sustaining the status quo and against those things which reduce carbon use.

          It would be a disastrous mistake to align the government’s interests with the slow-walk reduction or extended use of carbon-based energy. There is nothing that will extend its use more than if government workers sense their income is linked to continued use of this product.

          Part of the reason large-scale wind and solar projects are appealing is due to the revenue they generate for the government – that’s a good thing in two ways.

          • Mulga Mumblebrain says:

            Your argument against a carbon tax makes no sense, in my opinion. A carbon tax will make carbon-intensive processes more expensive, and the carbon-free processes much more economical. The tax will also raise money for the renewable research and development we all desire. So the private sector will be mobilised by price pressures and the Government will have the moneys needed for renewable development, and to compensate the working and middle classes. But it must be a tax, rising at a set rate, perhaps tied to success in decarbonising, and the proceeds must be hypothecated to the needed measures, A carbon trading scheme will be yet another ‘Market failure’, as the European one certainly has been.

          • Mulga Mumblebrain says:

            Sorry-I now see where you going to, and it’s not nonsense at all. It’s realism-cynical realism, the only type that works these days. All I can add is that a rising carbon price, which gives business ‘certainty’ must drive carbon intensive energy sources to the wall, particularly if subsidies are removed and renewables get the subsidies, like feed-in tariffs, instead. The suborning of politicians and bureaucrats by the fossil fuel interests would need to be punished, also, for a change.

        • Superman1 says:

          Hit the wrong button; see response in #14.

    • brendan says:

      They used horses to haul materials for the first oil derricks and now we have diesel trucks doing that work. Transitions still use old technology and resources.

  2. Omega Centauri says:

    So is First Solar going to make a profit from this, or could the price be an indicator of a local market hostile towards PV? I did see that New Mexico has a state PTC, with a variable (by year) return, averaging over $.025/KWhour for the first ten years, so FSLR will actually get more than the advertised price.

    • onyerlefty says:

      Correct. New Mexico’s PTC is actually $.027/kWh, so in reality solar is costing customers (and taxpayers) more than 2-1/2x what coal costs. Because it’s highly variable and thus dependent on CCGT gas generation, it also locks in dependence on fossil fuels for the life of the plant. Playing these accounting games is the only way to justify utility solar, which is a loser for customers and the environment.

      • Paul Klinkman says:

        Solar has a number of inherent advantages to our economy that coal doesn’t have.

        Manufacturing, erecting and repairing solar trackers in the field is still pretty labor-intensive. We have a labor rich but fossil fuel poor world these days.

        The big issue with coal is carbon dioxide. One subsidiary issue is carbon soot particles which are melting the Arctic. If we kill off future generations worldwide but not so much locally and not so much right now, should the timing and location of our killings really make a difference to us?

        Should we expect our corporations to be good corporate citizens even if there’s only a 25% chance of them getting caught in some horrid act? Yes, because if they cheat four times or 100 times there’s a huge chance that they will be caught, and getting caught is a disaster for their ability to turn a profit. Then, should we too be good world citizens right now? Yes, of course, always, even if some lousy tinhorn in some corruptopia isn’t a good world citizen. We would never base our morals on the morals of the worst person on earth.

        Localized coal issues are mercury pollution out the stack and tailing ponds next to the mines full of arsenic which in some cases have eventually flooded downstream, making good USA river floodplain land pretty uninhabitable for an unknown number of decades.

        • Mulga Mumblebrain says:

          I think that it would be appropriate to say that the externalised costs of burning coal, in the form of those pollutants you mention, are literally infinite. Therefore substituting coal with any non-greenhouse emitting energy source, is, by definition, always ‘more economical’.

      • Omega Centauri says:

        There is also the fact the solar peaks at the same time as demand, so a little bit of it (up to maybe 20%) reduces the need and expense of peaker plants and transmission upgrades. When Austin energy switched to avoided cost rather than net metering, the credits they paid for excess rooftop PV went up not down.
        The people who will be hurt by PV (and wind and conservation) are of course the fossil fuel companies. I wouldn’t be surprised if they are paying you to troll for them.

        • onyerlefty says:

          Omega, solar may peak the same time as demand but a good part of the time it generates little or no power at all. It has a deplorable capacity factor (in Arizona it’s about 20%; in Connecticut it’s 13%) which means at least 80% of the time CCGT is filling in to smooth the gaps.

          You claim fossil fuel companies are hurt by PV, but nothing could be further from the truth. Gas magnate T. Boone Pickens’s ill-fated “Pickens Plan” advocated massive investments in solar in wind only because he knew both would require natgas as backup as long as they existed. When the government didn’t bite he did a 180, claiming just a few months ago that “wind and solar will never take over for coal”.

          After decades of investment solar still provides a tiny fraction (less than 1%) of U.S. power. Trying to make a real dent in global warming with solar, and do it in time, is like trying to fight a house fire with a garden hose. Solar advocates push the equivalent of “what if every house had 200 garden hoses?”, to which the answer is obvious. To tile the southwest with enough solar cells to power the country would require roughly one quadrillion dollars, or one hundred years of our entire national debt. This doesn’t include any transmission infrastructure, but you get the idea – ain’t gonna happen.

          Coal is the biggest loser, natural gas is second, and so-called renewables are third because they keep everyone’s eye off the ball. The only way to stabilize atmospheric carbon by 2050 is to make a massive investment in nuclear power, the equivalent of building a new power station every week. In the early eighties it nearly happened – 47 new plants were built in 1983. I support nuclear because it’s justified, not because anyone pays me. Read some commentary by Greenpeace founder Patrick Moore, by environmental activist Mark Lynas, or by NASA climatologist James Hansen and you can’t help but come to the same conclusion.

          • Omega Centauri says:

            Nuclear’s PR case has been lost, face it. I used to support Nuclear for the same reason as you. Post Fukushima, I decided it was just a waste of time/effort/reputation.
            Sure the PV capacity factor isn’t great. But the power comes when its needed. Modern gas turbines can ramp pretty quickly, GEs latest claims 15minutes, which makes them an excellent complement to solar and wind.
            Certainly in the Southwest, solar peak matches the AC demand quite well.

          • Mulga Mumblebrain says:

            Your claim that tiling the southwest with enough PV to supply the country would cost one QUADRILLION, is the funniest thing I’ve read for quite some time.

          • Mulga Mumblebrain says:

            Oops! Sorry-I forgot to add that anyone whose supporting chorus comprises Patrick Moore and Mark Lynas ‘..just cannot be serious!’, as John McEnroe used to say.

          • Superman1 says:

            ” The only way to stabilize atmospheric carbon by 2050 is to make a massive investment in nuclear power”
            We have been led down the primrose path to think that stabilizing carbon by 2050, or limiting temperature rise to 2 C, or 1 C, will keep us from going over the cliff. Where is the evidence that the present 0.8 C is stable? The ice cap is almost gone in Summer, and Alexeev’s recent paper on the effect of warm Atlantic water in the Arctic essentially guarantees that the Summer ice cap will be gone very shortly. Then we will have Arctic water heating 24/7 in the Summer from both the Sun and Atlantic water.

            Archer believes the clathrates are buried sufficiently deep in the sediment to be protected from thermal pulses for a long period of time. But, how valid is that assumption? The following was published in December 2012. It shows that some clathrates are found at much shallower depths, and could be vulnerable to Arctic water heating. The level of danger all depends on the amount of clathrates and where they are distributed, and my guess is that the ‘black’ community is gathering this data in droves. We may, in fact, be further over the cliff than anyone realizes.

            “A ‘test case’ for how undersea deposits of methane — a greenhouse gas locked in sediments — might respond to climate change has been uncovered in the Arctic Circle.

            The shallowest known deposit of methane hydrate — a crystalline solid comprising methane molecules trapped in an ice-lattice structure — has been discovered on the continental slope off Canada in the Beaufort Sea.

            The trapped gas deposit is located in an area of small conical hills on the ocean floor just 290 metres below sea level. Before the discovery, the shallowest known marine gas-hydrate deposits were found in the Gulf of Mexico and in the vicinity of the Svalbard Islands at depths of around 400 m, says Charles Paull, a senior scientist at the Monterey Bay Aquarium Research Institute in Moss Landing, California, who presented the work on Thursday at the annual meeting of the American Geophysical Union in San Francisco, California1.

            This particular deposit is only modest in size, but the methane trapped in such deposits represents an immense global carbon reservoir. Some experts fear that destabilization of such gas-hydrate deposits around the world — caused by changes in sea temperature or drilling, for example — could cause a release of methane into the environment and accelerate global warming. At such a shallow depth, the newly discovered deposit is vulnerable to decomposition if there is even subtle warming of the overlaying water, says Paull.”

            Under these high-risk conditions, the prudent course and only glimmer of hope is a three-pronged approach: terminate fossil fuel use ASAP; initiate rapid carbon recovery ASAP; low-risk geo-engineering to ‘quench’ the positive feedback mechanisms we see in operation today. Mother Nature could care less about our having any auxiliary power sources to make our lives easier and more comfortable. She wants one thing, and she wants it now: terminate the cause of the man-made warming now!

          • Daniel Coffey says:

            We have enough nuclear power capacity at the moment to generate 20% of our electricity. What is very clear, however, is that once built, nuclear is like a teenager who ages into an adult and then into old age, and continues in old, unproductive age for many multiples of the time it was productive.

            Those who think nuclear is attractive see only the nuclear youth phase, not the hyper-extended old age phase in which maintenance and care for ultra-dangerous materials must continue centuries after the productive life is ended.

            As one who spent some time in the Superfund program in California when it first began, I can tell you that the tendency or urge to pick up and leave environmental harm behind is a human tendency with more power than the urge to tend old and dangerous structures in perpetuity.

            The aftermath is the problem. We now have nuclear, which we should use and extend the useful life of to the maximum extent. But as for building more, that is not a great idea for very practical reasons.

          • Dennis Tomlinson says:

            Mulga: Que pasa Mark Lynas?

          • onyerlefty says:

            Superman1, it’s quite clear that at this point stabilizing carbon will not prevent us from going over a global warming cliff. At best it will mitigate its effects somewhat, or buy us some time. The clathrate gun scenario is a wild card which could make any attempt to change things at this point wholly irrelevant.

            So what’s the point? Maybe there isn’t any, but choosing to be somewhat optimistic and proactive I’d agree that an immediate moratorium on fossils would offer a glimmer of hope. Because I don’t believe in unicorns, or that the rest of the developing world will suddenly decide washing machines and air conditioning aren’t that great after all, nuclear will be necessary to make that happen. It has nothing to do with making my life easier, personally I could get by with a lot less energy (and am, as time goes by). It’s the other 7 billion.

            CCS is vulnerable to fraud, geo-engineering is at best a Hail Mary, but resources devoted to either beats solar power. Looking to solar as something remotely helpful at this point would be laughable if it wasn’t for the dangerous delay its causing in pursuing solutions that can make a difference. Anyone who believes otherwise doesn’t know the numbers.

          • onyerlefty says:

            Daniel, if global warming will make the Earth uninhabitable in 500 years what’s the point to worrying about radioactivity 10,000 years from now? Are you aware that radiation at Chernobyl is 1/1000 of what it was 25 years ago, and the area has become a wildlife refuge because people with an unrealistic fears aren’t around to drive animals away?
            http://www.nytimes.com/2007/08/28/science/28obradi.html

      • Superman1 says:

        Is this what you had in mind? Some paragraphs from an LATimes article.

        “The Delta Energy Center, a power plant about an hour outside San Francisco, was roaring at nearly full bore one day last month, its four gas and steam turbines churning out 880 megawatts of electricity to the California grid.

        On the horizon, across an industrial shipping channel on the Sacramento-San Joaquin River Delta, scores of wind turbines stood dead still. The air was too calm to turn their blades — or many others across the state that day. Wind provided just 33 megawatts of power statewide in the midafternoon, less than 1% of the potential from wind farms capable of producing 4,000 megawatts of electricity.

        As is true on many days in California when multibillion-dollar investments in wind and solar energy plants are thwarted by the weather, the void was filled by gas-fired plants like the Delta Energy Center.

        One of the hidden costs of solar and wind power — and a problem the state is not yet prepared to meet — is that wind and solar energy must be backed up by other sources, typically gas-fired generators. As more solar and wind energy generators come online, fulfilling a legal mandate to produce one-third of California’s electricity by 2020, the demand will rise for more backup power from fossil fuel plants.

        “The public hears solar is free, wind is free,” said Mitchell Weinberg, director of strategic development for Calpine Corp., which owns Delta Energy Center. “But it is a lot more complicated than that.”

        Wind and solar energy are called intermittent sources, because the power they produce can suddenly disappear when a cloud bank moves across the Mojave Desert or wind stops blowing through the Tehachapi Mountains. In just half an hour, a thousand megawatts of electricity — the output of a nuclear reactor — can disappear and threaten stability of the grid.

        To avoid that calamity, fossil fuel plants have to be ready to generate electricity in mere seconds. That requires turbines to be hot and spinning, but not producing much electricity until complex data networks detect a sudden drop in the output of renewables. Then, computerized switches are thrown and the turbines roar to life, delivering power just in time to avoid potential blackouts.

        The state’s electricity system can handle the fluctuations from existing renewable output, but by 2020 vast wind and solar complexes will sprawl across the state, and the problem will become more severe.

        Just how much added capacity will be needed from traditional sources is the subject of heated debate by utility officials, government regulators and policy experts. The concerns are expected to come to a head next year when the state must adopt a 10-year plan for its energy needs.

        “This issue is someplace between a significant concern and a major problem,” said electricity system expert Severin Borenstein, a professor at UC Berkeley’s Haas School of Business. “There is definitely going to be a need for more reserves.”

        Borenstein said state legislators and the governor did not consider all of the details, such as unleashing this new demand for fossil fuel generators, when they set the 33% mandate for renewable energy. The state now gets 20% of its power from renewables, in part from older hydro and geothermal energy. Gov. Jerry Brown has advocated upping the goal to 40%.

        The cost to consumers in the years ahead could be in the billions of dollars, according to industry experts. California’s electricity prices are already among the highest in the nation and are projected to rise sharply in coming years. At the moment, the need for reserve power isn’t considered a cost of renewable power, though consumers have to bear its costs as well.

        The California Independent System Operator, the nonprofit company that runs the grid, estimates that by 2020 the state will need to double its reserve capacity. California now maintains a margin of 7% to 8% above projected daily demand, in case a nuclear power plant goes offline or outages occur. But when 33% of the state’s power comes from renewables, that margin will have to rise to 15%, said Stephen Berberich, the firm’s chief executive.

        Nobody knows whether Berberich’s estimate is right or how much the added capacity will cost. The California Energy Commission, which has responsibility for licensing new power plants and forecasting future power demand, said it doesn’t have the analytical tools necessary to know how much reserve power will be needed.

        “It is frankly in the development stage,” said Mike Jaske, the commission’s senior policy analyst for electricity supply.

        The independent system operator is warning that by 2017 the state will be short by about 3,100 megawatts of flexible power that it can dedicate to meeting reserve needs — about what three nuclear reactors produce. The company is pushing the state Public Utility Commission to require that capacity. The commission has been noncommittal so far.”

        • onyerlefty says:

          Exactly. Do you have a link to that article?

          • ToddInNorway says:

            onyerlefty and Superman1, you both would benefit greatly by looking at the potential for energy storage to smooth out variations in renewable production production. Energy storage is a replacement for “reserve” or “back-up” FF power plants. Alternatives concepts for energy storage are pumped hydro, compressed air, large-scale underground storage of hydrogen, thermal storage, large electrochemical batteries, etc. Some of these were originally developed decades ago to deal with the non-dispatchable nature of nuclear. Now they can work for the non-dispatchable nature of wind and PV. Note that solar thermal in general already has considerable energy storage built-in to their systems.

          • Superman1 says:

            Onyerlefty,

            Here is one link: http://wvgazette.com/News/Business/201212160055.

            ToddinNorway,

            Agree with alternative backup potential. How do you see that impacting the final price?

      • The original article by Bloomberg indicates that the full prices are not yet clear and that Federal and state support distort the total economic picture so much that the very low prices mentioned are basically misleading.
        As desirable as solar PV is, it is far from being cheaper then coal. Also, the backup power adds considerable cost and CO2 to the picture.

        • Superman1 says:

          Outstanding observation, and bears repeating: only the findings, data, and assumptions favorable to solar were extracted and presented here!

  3. Daniel Coffey says:

    This is remarkably good news. And a visible signal of what energy folks have known is possible for some time.

    The transformational speed of large-scale solar and wind is capable of enormous acceleration if these projects are supported instead of opposed by environmental groups. The oil and coal companies know this and thus should be contributing to those who oppose them, but indirectly of course, in order to cause as much delay as possible.

    The practical reality is that solar and wind are capable of producing adequate or even abundant power, with the proviso that increasing storage capacity is available. That is the key to a 24 hr system.

    If the electricity from abundant solar PV power is transferred into vehicles during daylight hours to provide transportation, oil will actually have significant competition in the fuel market. Considering the price of gasoline and the miles per gallon versus the current 3 miles per kilowatt-hour for electricity, gasoline is vastly more expensive than electricity. This means that oil interests almost certainly understand that it is important to continue to slow-walk large-scale solar in order to delay development of competing technology.

    It’s worth noting that as long as solar is kept on residential rooftops, it will remain relatively expensive at around 25 cents per kilowatt hour instead of less than 6 from large scale facilities. Not only is it slow to deploy, but it is a small dent in the existing energy supply, and has no real chance of displacing other generation sources to a truly significant extent. Oil companies should support solar on rooftop to ensure a long market life for their products and avoid meaningful competition from carbon-free electricity sources.

  4. Omega Centauri says:

    No reason to be against residential PV, but environmentalists should be realistic and support the three major areas of PV deployment: Residential rooftops, commercial/industrial rooftops, and ground mount utility. The later is the only way we are going to reach high levels of penetration quickly. We need to push for rapid deployment, regardless of the ownership model (owner occupier, third party leasing, or utility). We need all these models.

    • Agree. It’s all good. Deploy, deploy, deploy, like Joe Romm says.

    • Daniel Coffey says:

      Now, for those who are willing to block deployment of anything but solar-on-rooftop, the message might best be frames as: “you look and act like an oil, coal or natural gas company. Is that what this is really about?”

      Time to walk the walk, not just talk the talk of preserving the environment. Drought from global warming is going to kill a whole lot of precious habitat, animals, and plants, and there will be nothing to be done about it. TIMELY Prevention is the only answer. Period.

      If we wait too long, no matter how hard we try or how much we spend, the greenhouse gases already in the atmosphere will be all that is needed to destroy a huge swath of what we all love.

      We need to march on down to public hearings about large-scale wind and solar and insist that the review process be short, sweet and to the point – and none of this frivolous delay for the purpose of extracting money or whatnot.

      • Mulga Mumblebrain says:

        Providing that the renewable energy projects are planned for part of the huge swathes of degraded, derelict and thoroughly abused land that makes up the vast majority of territory in all countries. Precious remnants of environments elsewhere destroyed, and which are refuges for biodiversity and endangered species, must not be used, because it is simply unnecessary to do so.

  5. MorinMoss says:

    This sounds like a bad deal on the part of First Solar; it’s great that the deal will save the utilities & probably the customers money but they could have bargained up quite a bit and still have a win-win all around.

    A deal at 8.5 cents per kWh would still have been a big saving for the utility.

    • Paul Klinkman says:

      Solar companies are bidding at cutthroat prices these days just to stay in the game. The marketplace is working rather too well, so that it hurts the industry in the long run.

      • Mulga Mumblebrain says:

        ‘The Market’ only operates to maximise the profits of the insiders, and it matters not whether the loot comes from wealth production or wealth extraction.

  6. ToddInNorway says:

    Daniel is correct. The war of the different energy technologies is over for all practical purposes for any location that is reasonably sunny. PV has won but there are still many battles to be fought because fossil fuel owners will not give up easily and are more than willing to use every dirty trick in the book. The case of Texas gives me reason to be optimistic, though. See related post on updates of wind, solar costs there that show clearly that these can compete, especially considering that thermal power plants will be stressed severely during drought due to lack of cooling water.

    • Daniel Coffey says:

      By the way, in Texas they cut out almost all environmental review of the wind and transmission projects. There is a weird lesson in that approach, as it has turned out far better than what extended studies would have produced.

      In effect, everyone already knows that some environmental harm will result from deploying energy systems. However, on balance that harm is significantly less – almost be definition – than what is going to take place if we pursue the status quo, even with modest renewable deployment and conservation.

      To be effective, it has to be big.

      • Mulga Mumblebrain says:

        We might as well do without so-called ‘environmental review’ because, in this country (and I doubt that it is much different elsewhere) such ‘reviews’ never argue that a project is too destructive to proceed. Yet the damage keeps on piling up.

  7. SecularAnimist says:

    Daniel Coffey wrote: “It’s worth noting that as long as solar is kept on residential rooftops, it will remain relatively expensive at around 25 cents per kilowatt hour instead of less than 6 from large scale facilities.”

    First, electricity from residential rooftop PV competes with the RETAIL cost of grid electricity, not the wholesale cost.

    Second, recent studies of the levelized cost of energy (LCOE) from various sources suggest that your estimate for residential PV is a bit high, and your estimate for wholesale power from “large scale facilities” is a bit low.

    Third, there is no reason to expect that the cost of residential rooftop PV “will remain relatively expensive” and every reason to expect that it will continue to decline rapidly. Note that a rooftop PV system in the USA costs almost TWICE what the exact same system costs in Germany — almost all of the difference the result of regulatory and administrative costs. Simply streamlining the permitting process could cause the end-user cost of rooftop PV to plummet. So could other reductions in “soft costs”, and standardization of mounting hardware and interfaces, etc. And that’s not even taking into account the dramatic reductions in the cost of the PV panels themselves, or new PV technologies that achieve higher efficiencies at lower cost.

    If the USA could merely duplicate what Germany has achieved — and given our vastly greater solar energy resources and available rooftop space, we could easily do far better — then distributed rooftop PV could generate enough electricity to drastically reduce the demand for grid-supplied electricity from ANY large-scale, centralized sources.

    • Daniel Coffey says:

      These arguments about solar-on-rooftop always end up in the same way. The reality is that deployment speeds for “rooftops” is exceedingly slow compared to how rapidly solar PV can be deployed in large and manageable increments.

      The ancillary equipment, the inverters, the dispatch-ablity, the grid instability, the control issues, the storage issues, all of which are vastly easier to deal with in large facilities at scale, are a major headache or impossible for small-scale deployment. A few roofs is ok, but I am talking about a transformed energy system which is capable of surviving and serving the needs of the poor, not just the rich.

      Let’s be clear – we absolutely have to do this and we have to do it fast. If we don’t the future is so ugly if defies description. Take a look at the draft US Climate Assessment. It’s a vision of Hell wrapped in banal terminology.

      • SecularAnimist says:

        Daniel Coffey wrote: “The reality is that deployment speeds for ‘rooftops’ is exceedingly slow”

        Germany has demonstrated that’s not the case when appropriate policies are applied, e.g. feed-in tariffs and streamlined permitting process. Installed residential rooftop PV in Germany is half the cost of the same system in the USA and gets done much faster — which is why rooftop PV has exploded in Germany, which is not even an especially sunny country.

        Anyway, this whole “centralized solar vs. distributed solar” discussion is nonsense. The two are complementary, not mutually exclusive, they don’t compete with each other for resources, and the businesses involved in deploying them are entirely different sectors of the industry.

        The reality is that distributed rooftop solar is coming at us fast, and big, for one simple reason: PEOPLE WANT IT. Everyone from individual homeowners, to the giant corporations like Walmart that are deploying huge amounts of PV on their vast tracts of flat commercial rooftops, WANTS IT. And as costs continue rapidly dropping to, and then below, grid parity, everyone is going to want it more and more.

        Just like personal computers, cell phones and flat screen TVs — distributed rooftop solar is a disruptive technology that is going to be hugely popular and will totally transform how and where electricity is generated and used.

        The rooftop solar revolution is underway, and I think it is unstoppable. It will look to the utility companies like a dramatic reduction in demand, and they are just going to have to deal with it.

        None of which is to say anything against utility-scale solar, ESPECIALLY solar power plants in the 20-100 KW range, which are perfect for municipal utilities and occupy the middle ground between distributed rooftop PV and the giant solar power stations of the sort being built on publicly-owned desert lands.

  8. Gingerbaker says:

    ” then distributed rooftop PV could generate enough electricity to drastically reduce the demand for grid-supplied electricity from ANY large-scale, centralized sources.”.

    Why is this preferable to large-scale sources? Why the romance with decentralized solar?

    To put up enough rooftop solar to power one million houses, one million homeowners have to come up with the scratch, or go into personal debt, to pay for each and every install. I do not see why the cost for green electricity should be borne on the backs of individuals.

    To put up enough rooftop solar to power one million houses, one million redundant sets of technology (not including the PV panels themselves) will have to be manufactured and installed.

    To put up enough rooftop solar to power one million houses, one million rooftops will have to have an installation customized to each and every rooftop.

    Rooftop solar is simply not particularly appropriate for a large proportion of where people actually live. It simply is not sunny enough along the corridors where most of the people in the country reside. To put up enough rooftop solar to power one million houses, many more than one million homes will have to install rooftop solar. The overall efficiency of this approach is far from ideal.

    There is a reason why we don’t ask homeowners to install water features which can power backyard mini hydroelectric projects. We put hydroelectric projects where they will enjoy massive benefits of scale. We should be asking whether we should be doing the same with solar.

    Rooftop solar, without a completely new paradigm for financing, is likely to be as much as a failure in the future as it has been for the past thirty years. We simply do not have the time to wait and hope to see if rooftop solar will catch on.

    We need to deploy massive amounts of renewable energy in the next 5 to 10 years if we hope to avoid a +4C world. We need a more radical, faster, and less costly path to a fossil fuel-free future and that, imo, is what large-scale solar and wind, financed Federally, will offer us.

    • ToddInNorway says:

      Hi Gingerbaker, New-build homes, offices and apartment buildings with pre-installed solar on the roof can finance this over the life of the mortgage or loan. This should be mandated in ALL sunny areas IMHO.

      • MorinMoss says:

        While I’m somewhat in favor of residential solar, there are so many existing places to install PV in the USA, with its abundance of shopping malls, big box stores, parking lots and schools.

        • ToddInNorway says:

          The big losers with a serious roll-out and take-up of residential PV are the owners/operators of the big power plants and grid distribution. Residential PV cuts directly into their profit by removing the daytime “peak” power consumption during the mid-day. This is the time when they generate almost all their profits for the year in areas with warm climates.

        • ToddInNorway says:

          Hi MorinMoss, I expect tens of thousands of owners of commercial property are crunching the numbers to install roof top on those buildings. Another large opportunity is roof space owned by the public. Schools, govt. offices, govt. housing etc. These can be financed with various long-term public financing. Here is an example from Australia
          http://cleantechnica.com/2013/02/04/western-australia-greens-propose-solar-on-all-public-housing/ .

    • Omega Centauri says:

      I agree that too much moral value is placed upon the alleged superiority of residential rooftops. I’m still in favor of them, but consider it to be the weakest member of the solar triad (residential commercial utility). The US will install the capacity of a million solar roofs this year, but most the the panels will be on commercial roofs, and especially utility plants.
      Third part financing is becoming the dominant mechanism for rooftop solar already. The installer guarantees a price for the electricity that is lower than the customers current utility charges. In some plans ownership eventually reverts to the homeowner. So financing need not be a show stopper.
      We also have a sector called “community solar”, which allows people without suitable roofs to participate by buying a piece of a group funded plant.

      Also I encourage people to look into crowdfunding solar projects, as a place to put some of their investments. It is time to push PV into the bigtime, and thats going to require significant capital investment. That capital won’t appear by magic, but if enough people step up to the plate we can get it done.

      • Daniel Coffey says:

        How large a deployment is “community solar PV”? How many megawatts? If it gets big enough it sounds just like a utility. Why not support our utilities deploying large-scale solar instead?

    • drt says:

      I think distributed de-centralized power is inherently more resilient than centralized large scale.

      • Daniel Coffey says:

        This is a slogan, not a reality. That notion is entirely reliant upon a stable grid that fills in whenever small-scale solar PV is not functional.

        Think through the entire process of generating energy behind the meter. Think about what happens when a powerful storm hits and takes the distributed solar PV down all over hell and gone. How and by whom are repairs going to be made? How long will that take.

        We need to get past slogans and untested ideas about what is resilient and what is not.

    • Daniel Coffey says:

      The simple logistics and economies of scale, not to mention the actual speed of deployment cause solar PV in large-scale the real answer. Everyone knows that hand-craft solar PV systems take days to deploy a 6 kW system.

      By contrast, a 100,000 kW system (100MW) solar PV facility can be built in a few months.

      We should avoid the cul-de-sac approach to solar PV, the slow-walk to nowhere, when we have in our grasp an entirely new world.

      Who wants to go back to IBM’s first desktop computer and give up their iPhone 5 or Samsung Galaxy III? Really, that is what is going on in the world of solar PV versus fossil fuel and turbine technology.

      When storage is included, we can do this thing!

  9. Theodore says:

    For 50 years we have needed and failed to construct an energy policy that would have the effect of replacing fossil fuels with renewable energy. Now solar and wind are becoming cost-competitive without such a policy. It seems to me that this sort of success is indistinguishable from failure. To understand our present failure, one must have the vision to see what might have been, were we not completely incapable of taking any meaningful collective action.

    • Mulga Mumblebrain says:

      The globally hegemonic capitalist Right rejects all ‘collective action’, apart from their own collective actions in lusting for maximised profits, suborning politics and having their MSM publish very nearly totally identical agit-prop to further the first two priorities.

  10. David B. Benson says:

    That is an amazingly low price!

  11. Superman1 says:

    I wouldn’t extrapolate too much from this one example. The only metric of consequence to our survival is emission/concentration of CO2. That has not been decreasing; the fossil boys are selling all they can produce, and are frantically searching for more. If and when the time comes that solar/wind could seriously challenge fossil to replace existing/planned facilities, the fossil boys will use their secret weapon – cut the price! States like Iran, Iraq, Saudi Arabia are essentially one product towns, and they will do what it takes to sell that product. They have much flexibility in what they can do to wages and profits to be competitive.

    • Omega Centauri says:

      At least for oil and gas, they are already going after “heroic” oil and gas “heroic” meaning expensive to produce. Why has the fifty year old fracking process suddenly become a big deal? Because the market price of oil is now high enough that they can make a profit. So at least in the case of oil, all these new types of difficult deposits become unprofitable to produce, unless the price remains high. That’s becoming true for gas and coal as well. If we can deploy enough renewables that the market clearing price of the fossil fuels drops substantially, then many of these difficult to produce reserves are left in the ground.

      • Superman1 says:

        Cost accounting has some features that overlap with Alchemy. A recent article by Jason Margolis, entitled The Energy Costs of Oil Production, contained this observation: “One researcher I spoke with, Carey King at the Center for International Energy and Environmental Policy at the University of Texas at Austin, said he can look at the same wind farm and calculate a payoff of 20-to-1 or 4-to-1. He can also make the numbers dance for oil too, by the way. It depends on if he factors in things like salaries, taxes, or subsidies. Or, how the energy is actually delivered to the source where it’s used, or rather, the calculation for that.” The oil producers, and speculators, have substantial flexibility in how they play games with the cost components.

    • Dennis says:

      The folks in the middle east understand energy. They are investing heavily and planning on deploying renewables in significant volumes. Why? Because they burn their own oil to generate electricity. They have realized this is a huge loss of income. Their solution is to use solar and wind to generate electricity, not oil. The oil they no longer use for electricity generation they sell to the rest of the world. The profit pays for the renewables, and more. It’s simple. And when the oil runs out they have a renewable infrastructure to sustain them for generations.

  12. Leif says:

    I wish you nay-sayers would sit down and factor the real cost of “cheep” fossil when you factor the health of the people, the climatic disruption, the acidified oceans, the food prices due to drought and flood, the rebuilding after storm and so much more into the cost of Fossil. Level the playing field and fossil loses every time. And you lose until then. The GOP do not fund abortion. Fine. A precedent. Why must the rest of us fund the ecocide of the planet via subsidies to the Fossil Barons?

    • Mulga Mumblebrain says:

      Because other human beings do not amount to ‘Hell’ as Sartre said, but merely to ‘externalities’.

  13. Raul M. says:

    I think a good profit could be made in retrofitting the statue of liberty with another set of arms to hold a broom to sweep the sea level rise back out to the deeper sea.
    Then the rooftop solar would still be good because there is little loss in transmission lines.

    • Daniel Coffey says:

      The popular meme of “losses in transmission” is not real. Such losses typically constitute 2-3%, a relatively small amount, especially when compared to the advantages gained by placing solar PV in much sunnier locations. The highest line loss I have ever heard anyone suggest – and it was not real – is 7%.

      Compare the output from sunny solar PV versus foggy solar PV. You’ll quickly realize that places too sunny to be comfortable for most people are just fine for solar PV. And to get there you need transmission lines.

      Let’s get real about the solutions and build them, not distract ourselves with untested notions tossed out by oil, coal and natural gas companies to dissuade people from doing what will be competitive with their profit models.

      • Gingerbaker says:

        Right on.

      • Raul M. says:

        A few years ago there was talk that First Solar would be doing residential projects
        or more specifically would make their panels available to the residential market. Too bad to have such talk about the importance of homeowners having say about their own.

        I guess you lost it completely over the sugestion that the statue of liberty could be more than a tourist destination.

  14. Superman1 says:

    “Someday our energy infrastructure will reach that critical mass where renewables can be reliably used to make more renewables, but until then, I’m okay with this model.”

    The issue is not whether you are okay with this model, or I am okay. The issue is whether Mother Nature is okay. Right now, I’m not convinced she is, and no one on this blog has presented evidence supporting that she is. If I were convinced she is okay with that model, I would say go for it as fast as humanly possible. But, if the fossil fuel required for the transition (both for keeping our present energy profligate lifestyle and for building these renewables facilities) drives us over the cliff, it will all have been for naught.

    On the other hand, if the real world choices that we have are business as usual or going in the direction you suggest, obviously your approach is preferable. In this case, ‘preferable’ may not turn out to be enough.

  15. SecularAnimist says:

    With all due respect to all commenters, this “argument” about centralized utility-scale solar vs. distributed rooftop solar is nonsense.

    It’s not an “either/or” situation. The two technologies are complementary. They are not mutually exclusive, they don’t really compete with each other, and for the most part the businesses involved in deploying them are completely different sectors of the industry.

    Also, I have to say that there are quite a few comments here that are strikingly ill-informed as to what is actually going on in the real-world solar industry today, both in the USA and elsewhere. A lot of the comments disparaging centralized solar, or distributed solar, or both (e.g. the pro-nuclear nonsense posted earlier) are of that nature.

    I find that surprising for regular readers of this blog, since along with developments in climate science, this blog does report on renewable energy. I urge you all to pay closer attention to the reports on the solar industry that appear on this site (some commenters here, for example, seem unaware of some of the basic facts reported eveb in THIS article, that they are commenting on!).

    Another excellent site for updates on solar, wind, other renewable technologies, as well as efficiency, EV, storage and smart grid technologies, is CleanTechnica.com. I highly recommend it.

    • SecularAnimist — Excellent analysis!

      I self-installed (2 weekends, held a barn-raising) my grid-tied, 10KW Solar PV array in late September, 2010, for $1.4/watt after 65% combined fed/state tax credits ($3.5/watt unsubsidized). The system’s been performing above the mfgr’s spec (14,400 KWH/year) since. Here it is (Gillis Springs, Georgia):

      https://picasaweb.google.com/115162333107690986192

      I think folks should build what makes most economic sense to them. In some areas utility scale solar will make sense, and in others residential-scale (rooftop, farm fields, backyards).

      My Grid Operator friend favors residential because the greater dispersion results in higher grid stability. Also, big solar farms require big grid modifications and, as in California, sometimes outrageous new transmission line costs. In contrast, millions of small systems like mine, widely dispersed, can cost a grid far less.

      Thanks to the Chinese, I can build the same array today for $1/watt, which many deem to be grid parity. It helps that I live in a no-permit jurisdiction (but I built all my stuff, including my prototype steel home, above code). And, I project that by 2017 I’ll be able to build my array for $1/watt without subsidies. THEN we’ll see the Home Depot “Solar Aisle” open up and tens of millions of unsubsidized arrays go up on roof tops, in back yards, etc. And Joe Six Pack (that’s me) will fund it himself because, even at 8 cents/KHW reverse-meter credit (what I’m now being paid), and at 13 cents/KWH retail (what I pay at night), he’ll make/save $1000 year (I do!), which means 10-year payback on a 30-year system.

      That’s $10,000 for a 10KW system with a 10-year payback and 20-year upside. Simple equation to sell to “Joe,” who didn’t mass-consumer-buy PC’s until they too got simple/cheap enough. See the pattern?

      For more on the economics of my array, click here: https://sites.google.com/site/freemarketsolarpower/home/my-open-letter-to-mage-solar

      I have collected research and comments on subsidization, and what’s needed for a mass consumer market for solar PV, here: JamesChristopherDesmond.com