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Solar Power Much Cheaper to Produce Than Most Analysts Realize, Study Finds

By Joe Romm

"Solar Power Much Cheaper to Produce Than Most Analysts Realize, Study Finds"

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The public is being kept in the dark about the viability of solar photovoltaic energy, according to a study conducted at Queen’s University.

Many analysts project a higher cost for solar photovoltaic energy because they don’t consider recent technological advancements and price reductions,” says [co-author] Joshua Pearce, Adjunct Professor, Department of Mechanical and Materials Engineering. “Older models for determining solar photovoltaic energy costs are too conservative.”

Dr. Pearce believes solar photovoltaic systems are near the “tipping point” where they can produce energy for about the same price other traditional sources of energy.

That’s the news release for a new journal article, “A review of solar photovoltaic levelized cost of electricity” (subs. req’d).  The analysis concludes:

Given the state of the art in the technology and favourable financing terms it is clear that PV has already obtained grid parity in specific locations and as installed costs continue to decline, grid electricity prices continue to escalate, and industry experience increases, PV will become an increasingly economically advantageous source of electricity over expanding geographical regions.

That argument is one Climate Progress and others have been making for a while (see ‘Ferocious Cost Reductions’ Make Solar PV Competitive and Utility CEO on Solar: In “3 to 5 Years You’ll Be Able to Get Power Cheaper from the Roof of Your House Than From the Grid”.)

Here’s more for the news release (plus some more must-have CP charts):

Analysts look at many variables to determine the cost of solar photovoltaic systems for consumers, including installation and maintenance costs, finance charges, the system’s life expectancy, and the amount of electricity it generates.

Dr. Pearce says some studies don’t consider the 70 per cent reduction in the cost of solar panels since 2009 . Furthermore, he says research now shows the productivity of top-of-the-line solar panels only drops between 0.1 and 0.2 percent annually, which is much less than the one per cent used in many cost analyses.

Equipment costs are determined based on dollars per watt of electricity produced. One 2010 study estimated this cost at $7.61, while a 2003 study set the amount at $4.16. According to Dr. Pearce, the real cost in 2011 is under $1 per watt for solar panels purchased in bulk on the global market, though he says system and installation costs vary widely.

Solar is ready for its close up now.

For more, see Anatomy of a Solar PV System: How to Continue “Ferocious Cost Reductions” for Solar Electricity:

(Chart from Emanuel Sachs of MIT. Note: Even this data is already two years old.)

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19 Responses to Solar Power Much Cheaper to Produce Than Most Analysts Realize, Study Finds

  1. John Tucker says:

    Its the all or nothing major investment involved that is keeping people in the dark.

    Probably one of the most important properties of solar rooftop instillations is they encourage conservation.

    Joe do you are does anyone know if there is a technology or is it even possible to put a smart, “reverse outlet” on ALL us homes where an individual could safely plug in any power generating technology.

    People could purchase individual panels and plug them in themselves.

    I think that would be exceptional – especially if the property owner was also given an option of intermittently cutting off power completely from outside sources.

  2. Mike Roddy says:

    Great news, thanks.

    The only thing standing between distributed solar and widespread deployment is the discount rate. Outside of a few areas, banks are the ones providing the money to homeowners. They typically don’t provide funding at mortgage rates, but standard remodel costs, which is far more profitable for them.

    Meanwhile, of course, gas and coal companies get cheap money from merchant power banks, another example of the skewed power market.

    This is too critical a need to leave to the same people who brought us student loans with 7 non disclosed fees, and toxic mortgages that were sold to municipalities in Norway and Iceland.

    The Federal Government needs to step in here. Fannie Mae and Freddie Mac are money machines for politicians and lobbyists, and can’t be trusted any more than the banks. A new agency to oversee clean energy financing at the individual home and business level is urgently needed. Buildings will have improved cash flow, and as long as the borrower has a little equity, it would be a great program for everyone- and quite doable.
    The taxpayer would break about even, and the atmosphere would show a giant profit.

    • Leif says:

      Both important points John and Mike. And as pointer solar PV encourages conservation awareness and the least expensive kWh is the one not used. I do see numerous problems with most Americans adding to a plug in systems as we are talking high voltage and adequate construction structures to hold the panels in the inevitable storms etc. Most cannot address a leaky faucet. However small systems for the third world poor, now that is a different story.

      http://cleantechnica.com/2011/11/14/give-solar-while-going-solar/

      It can be done. It must be done.

      • Mark Shapiro says:

        Leif,

        Thanks for the link to the terrific Sungevity project to bring out a simple PV, battery, LED light, and USB charger combination package. THe design looks perfect: modest size and efficient (all DC). It provides very high value at low cost.

      • Raul M. says:

        99ers might think that a plug in sys to a dryer outlet could be done by the delivery person and would work out better than paying to keep up that old gas hog clunker. Geesh, that car has parts falling off as it would go on the highway.
        And a small sys that powers the window AC unit. Why, in a hot climate someone might forget to turn the air conditioner off and that AC UNIT COULD JUST COOL AND COOL.

  3. Tim says:

    One way you might make a big impact with this information is to put it into information packets to be sent to munipal governments throughout the country. In particular, what is needed is a massive adoption of building codes where new single-family and multi-family dwellings are going up. Since most people finance single-family homes with 30-year mortgages, the drop in monthly electricity bills throughout the South will more than compensate for the increased mortgage expense that an included solar system would entail.

    All new homes with solar installed from day #1 might be the tipping point that keeps the state of Texas from building more coal-fired plants. And then, who knows, maybe they’ll start not replacing the aging old ones…

  4. Mark Shapiro says:

    As soon as some builder/architect/designer figures out how to integrate PV panels into roofs to eliminate the installation costs, PV will take over.

    At $1/Watt, PV in the US southwest has a 10-20% ROI. A low risk, tax-free 10-20% ROI.

    That is a very compelling number.

  5. Rabid Doomsayer says:

    How about putting in the change of cost of coal over the last ten years. For all that the coal mining industry is aghast at any sort of carbon price, they still seem incredibly optimistic about future prices even with a carbon price.

    With floods in Australia and a bridge collapse in Indonesia production has been tight this year. Are we approaching peak coal? Are the remaining reserves economically recoverable? At what price?

    Developing solar should also be seen in the light of the developing demand supply gap in coal. While peak coal theory is gaining traction, demand predictions are for continued growth.

    A new coal fired power plant has to be economic well into the future. Guaranteeing coal supply twenty plus years into the future could be problematic.

  6. OKParrothead says:

    Given that our traditional fossil fuels get six times the government subsidy as solar, I’m surprised it isn’t cheaper already.

    Let’s kill those subsidies to coal and oil and apply it to solar.

    I’m looking forward to the day I can have a hybrid house!

  7. Happy Heyoka says:

    In Australia retail price is $5.70/W for a 2.1kW system – that includes installation, inverter and roof hardware and excludes subsidies.

    That comes down to about $2.60/W including federal subsidy.

    We expect about $800 per year reduction in electricity cost given 25c per kW/Hour feed in tariff and about 22c per kW/Hour for electricity consumed.

    As I write this, we are at virtually at parity with US$ (ie: A$1 = US$1.01)

    Are we approaching peak coal? Are the remaining reserves economically recoverable?

    Unfortunately, no. Open cut coal mines are cheap to operate, and I have seen estimates that here in Australia we have hundreds of years worth of coal left…

    All new homes with solar installed from day #1 might be the tipping point that keeps the state of Texas from building more coal-fired plants.

    It seems obvious, doesn’t it. For large chunks of the USA (as in Australia) it would be selling point for new houses (IMHO) that the running cost for the house over 30 years could be reduces by at least $20k.

  8. ClimateBites says:

    Thanks for flagging this, in repeated posts.

    Following Solyndra, many people think that solar is failing, not realizing that it is the steep price drops by competitors — solar’s success — that undermined Solyndra profitability.

    Keep it up!

  9. Jody says:

    Wait until utilities start charging a “standby” fee as Dominion Power wants to do in Virginia. Basically, grid tie systems use the grid as a virtual battery, charging during the day and discharging at night. A real physical battery would cost the solar system owner a substantial amount and the utility “battery” is free, if you have net metering. Utility companies such as Dominion want to recoup the cost of maintaining that virtual battery, there is no free lunch.
    Another way to look at this: If you are net metered and your system is designed to be NET ZERO, you pay the utility ZERO although you purchase power and use of utility infrastructure that the utility would normally collect money from its use (the “discharge” of the virtual battery).The utility is there when you NEED it, day or night, but the utility can count on you only when the sun is shining not when they NEED it and they are paying the retail rate, remember this is a net metered system, the retail rate covers both the cost of energy AND DISTRIBUTION, so why is the utility paying YOU, the solar system owner, the distribution cost to distribute power over THEIR network? Sort of double taxation, isn’t it?
    This is an issue that needs addressing sooner rather than later.
    Full disclosure: I own a solar business

  10. ccaissie says:

    The issue of solar being productive only during daylight may mean that our societal patterns may change. It is conceivable that we become more diurnal, that night shifts in industry begin to become outmoded or uneconomical, and that the cost of off-hour power rises and becomes prohibitive for casual use. Night returns, and the natural world is happier.

  11. Bill Moore says:

    John Tucker… as I understand it, Kim Adelman (Plug In Conversions Corp) has developed a way to use the solar inverter as a connector that allows him to also use the battery in the Priuses he’s converted to plug-in. Conceivably, you could plug any other power source into it. He has a whopping 12kW system at his home in San Diego County. I believe he’s filed a patent pending on it.

  12. Dr.A.Jagadeesh says:

    Such encouraging news appears regularly in western press. But in reality the cost of solar power generation at present in developing countries is exorbitantly high even compared to other renewable power like Wind or Biomass.

    Dr.A.Jagadeesh Nellore(AP),India
    Wind Energy Expert
    E-mail: anumakonda.jagadeesh@gmail.com

  13. Christopher Yaun says:

    http://www.graniteviewpoint.com/search/label/solar

    Financial analysis by a CPA.

    The house is super-insulated, borrows heavily from the Passive House folks, almost net zero and uses 1/10th the energy of a typical energy star rated house.