The price of solar power just fell 50% in 16 months

http://electrek.co/2016/05/02/price-solar-power-fell-50-16-months-dubai-0299kwh/

by lxm • 10 years ago

756 435 10 years ago

Retric5• 10 years ago

A side effect of this, large scale grid solar is now significantly cheaper than rooftop solar due to labor costs.

giarc• 10 years ago

At which point would it be financially beneficial for a farmer to turn a field into a solar farm rather than plant a crop? I have no knowledge in economics of either so I couldn't even estimate.

MichaelBurge2• 10 years ago

I think you get fined if you do that.

imglorp• 10 years ago

On a related note, an agricultural high school near me has a field dedicated to solar panels, that powers most of the school buildings. The students are learning how to farm photons alongside corn.

http://solarbuildermag.com/news/church-farm-school-in-pennsy...

Tloewald• 10 years ago

I think the economics of food production will probably trounce that of power production. In any event, it's more efficient to stick solar panels in the desert and wire electricity to places that are less sunny.

Retric5• 10 years ago

Diminishing returns mean you end up covering deserts with solar before farm land. Next, highly marginal farm land.

On the other hand, wind farms have a tiny footprint so that's already a major thing in some areas.

SwellJoe3• 10 years ago

There's a lot of farmland and ranch land in the US that shouldn't be farmland or ranch land. They're too dry, too hot, and competing for water resources with people and natural (sometimes endangered) ecosystems.

So, maybe it's something that should be encouraged; the food those farms and ranches produce would need to be replaced by food grown in more appropriate climates, and we'd need to rethink our recent "local food" movement, in some regards, but agriculture, and particularly animal agriculture, are an ecological disaster almost everywhere they exist. Couple that with limited water resources (where a lot of agriculture takes place in California, Texas, Arizona, and New Mexico) and you've got a recipe for serious problems long-term.

That said, agriculture could also shift. Less water-intensive foods, more foods that are appropriate for the area they're being consumed in.

Anyway, I think solar farms replacing agricultural farms could be a net win for the environment, even before considering the improvements that come from turning off coal-fired plants.

tinco• 10 years ago

Well the farmer doing it himself wouldn't be financially attractive (too big setup costs). But if the farmer is the land owner then he could rent it out to a power business that are good for the upfront costs. The exact point that would happen is when all the cheaper (non-arable) available land is already covered. That might have already happened in specific locations and countries.

Note that at the moment upfront costs (the panels) are so expensive it will be a long time before solar panel 'fields' would become any significant fraction of total arable land. I.E. a simple few acre farm field might be worth a couple hundred thousand euros, but totally filling it with panels might cost billions.

mrfusion2• 10 years ago

Or do both! Grow mushrooms under the panels.

spiderfarmer• 10 years ago

In arid regions with a low crop per acre yield it's beneficial right now. If the farmer has the money to finance it by himself it's almost certainly beneficial. But ofcourse it's better to just put them on your roof. In Germany and The Netherlands most farmers have solar panels on their (quite large) barns.

stale20023• 10 years ago

This is a common mistake that people make, especially when talking about fancy, flashy technologies, like drive way solar panels, road solar panels, ect

We do not have a shortage of land or places to put solar panels. Land is cheap, cheap, cheap compared to the other costs of solar panels.

There is no need to come up with fancy schemes to convert roads or windows or farms or whatever to solar panels. We aren't running out of land for them any time soon.

epistasis11• 10 years ago

Farmland is already being converted, with predictable NIMBY reactions:

http://watchdog.org/191942/critics-want-sunshine-huge-mn-sol...

http://www.startribune.com/big-solar-parks-proposed-for-minn...

Including "prime" farmland:

http://www.mprnews.org/story/2016/02/03/opponents-want-minne...

mrfusion2• 10 years ago

Why can't large scale solar be combined with wind power to get double he energy output from the same land?

jksmith• 10 years ago

Well large corp/utilities need to grab it now because if endpoint arbitraging becomes widespread, that will be a serious threat to the old utility model.

vonmoltke• 10 years ago

This article is making a really big deal out of bids. While the trend is encouraging, let's wait and see if the winning bidders can actually deliver at the prices they bid before getting too excited.

tim3334• 10 years ago

Hard to tell for a while as these tend to be 20 year contracts.

mdorazio• 10 years ago

I think that's part of the reason the bids are so cheap, though. They're probably counting on some cost reductions over time so that even if they lose some money up front, the long-term profitability will be there. I doubt that anyone can actually deliver solar power at a profit today for the bid prices listed.

cyberpanther• 10 years ago

Actually I don't think it matters if they deliver at that price or not, just as long as the infrastructure gets built. Just like the companies that built the transnational railroad went bankrupt. That's the boom, bust cycle at work, for good at least this time.

Semiapies• 10 years ago

Yeah, the headline is essentially false.

IkmoIkmo• 10 years ago

Agreed.

Now, I actually DO think they can deliver at the prices. But that doesn't mean solar prices dropped by 50%.

Imagine this: you've got a business opportunity for a 20 year contract. Currently it costs you $10 to run per year, but that will drop to $6 after a few years, and drop further to $1 per year in the last 10 years.

Where will it be priced? Well if I said say $5, then most would agree that makes sense. After all, your average cost will probably be something like $3 a year, so locking in the rate at $5 means you're making a profit. In fact, you'd expect others to outbid you until the price approaches the average cost of $3. But let's say it ended up priced at $5... well a journalist might say 'prices dropped by 50% this year'. When in reality, prices will drop over the next TWENTY years, and 20-year contracts reflect that expectation. Solar prices today are still $10 today, not $5.

Of course these are just made up numbers. Point is, even if companies can deliver at this pricing, it's mostly a reflection of expectations of future prices, not today's prices.

tim3334• 10 years ago

Pretty impressive. They need to work on cheaper batteries now.

ebbv• 10 years ago

Those prices are dropping drastically too as manufacturers have been opening manufacturing facilities and the technology continues to improve.

dpierce9• 10 years ago

Batteries would be great but they are not necessary unless you want to replace all generation with solar which would be a gargantuan undertaking. As part of the current generation stack, even at expanded scale, solar works very well without storage.

dragontamer13• 10 years ago

Yup. There's no reason why we can't rely on peaker plants a little bit longer. In general, there's a ton of power-plants designed to turn on and off throughout the day to inject power into the grid when demand grows.

The chief benefit however, is that this happened starting at daytime hours (when workers come into factories and tons of energy is suddenly demanded from the grid). However, because 12:00 noon is peak solar, peaker-plants will shift to later in the day to 3:00pm to 5:00pm or so (as opposed to running from 12:00 to 7:00 each day, they'll maybe run 3:00 to 7:00 each day).

Peaker Plants can be Hydro or Natural Gas. Natural Gas Peaker Plants are the most expensive, and they currently happen to run during a similar timeframe as solar.

For now, Peaker Plants can remain the solution. We need something to work on cloudy / rainy days after all. And "battery" tech is getting better.

http://www.aresnorthamerica.com/

kibwen• 10 years ago

100% solar isn't the only scenario where a battery in the home would be useful. Even today, one could install a battery with an intelligent monitor that charges during non-peak hours and discharges during peak hours, effectively arbitraging the price of power. I have no clue if this actually makes sense economically, however.

saalweachter• 10 years ago

You can also just change the definition of off-peak electricity.

The coal grid already provides cheaper electricity at different times of day, because it's not efficient to turn coal plants on and off. Right now that cheaper electricity is at night, because most electricity consumers consume during the daylight hours. So if you need a boatload of electricity and aren't too sensitive about the time, you can shift you consumption to the off-peak hours and save some money.

But if you're not time-sensitive in your consumption, you can shift to the sunny daylight hours, when solar power is available. And if you're really not time-sensitive in your consumption, you can even shift consumption from cloudy days to sunny days.

epistasis11• 10 years ago

As ebbv points out, they are dropping really fast in price.

There's a fairly decent analysis from Lazard consulting on storage:

https://www.lazard.com/perspective/levelized-cost-of-storage...

It used to be part of their cost of energy analysis, but has recently been broken out:

https://www.lazard.com/perspective/levelized-cost-of-energy-...

But since these report aggregate information from previous years, they always feel out of date compared to watching the latest news.

Ramez Naam's forecasts are the most informed forecasts that I have found:

http://rameznaam.com/2015/10/14/how-cheap-can-energy-storage...

awqrre• 10 years ago

or maybe an efficient way to convert electricity to hydrogen and then use it in a fuel cell when needed

hughes• 10 years ago

If the price of solar continues to drop rapidly, why would anyone buy solar? Waiting a couple years for another 50% price drop seems like an obvious choice while we're still in the $5k-10k range to outfit a home.

maxerickson9• 10 years ago

Presumably people buying solar now are comparing it to the other available options rather than future solar.

Scirra_Tom• 10 years ago

Isn't it only dropping because people are buying it? If no one was buying it, it'd get more expensive. Also, a 50% drop this year doesn't guarantee a 50% drop next year. And perhaps there's some speculation that traditional energy sources are going to increase in price going forwards.

Also, I think for a lot of buyers there's more to the purchase than cost. A lot of organisations have environmental targets to hit nowadays, solar is one way to realise these targets.

And as another commenter mentioned, some people buying might not have a choice (not having electricity isn't an option).

dabeeeenster• 10 years ago

Some of the costs are not going to come down much more. Installation labour, roof panel frames, inverter etc. etc. can come down a little but not by much.

https://electrek.files.wordpress.com/2016/05/chart.jpeg?w=77...

The price curve has to start flattening out soon! (I hope it doesn't, but I can't see how you can carry on achieving 50% price drops so rapidly...)

dicroce• 10 years ago

If efficiency went up, installation can come down...

Retric5• 10 years ago

People need power now and are not willing wait 5 years. So, someone is going to buy additional power generation now. In which case it's a question of current solar prices vs. (coal, nuclear, etc.) not future solar prices vs current solar pirces.

mathgeek• 10 years ago

Do you mean the generated power, or the generation hardware? If it's the cheapest energy source available in a market where you have the freedom to choose your supplier, it's a no-brainer.

beachstartup• 10 years ago

sure, this is what they teach you in econ 101 about deflation, but in reality, people buy things with utility even if they're getting cheaper (computers, cars, electronics, etc.)

theandrewbailey• 10 years ago

People are buying solar today because it's already cheaper than buying grid electricity in a few places. Why wait for another price drop while paying the electric company even more?

wmeredith2• 10 years ago

This is only an issue if you don't NEED the energy NOW. People need it now and they have to get it from somewhere. It doesn't matter what it will cost if you have to have it now. All that matters is what your options are today.

sdneirf• 10 years ago

I cannot imagine utilities lobbying group not going whole hog to squash this.

cubano• 10 years ago

It's interesting how no one is discussing how the governments massive subsidy of the solar and wind power industries are completely distorting the market for these "prices", so studies like these are pretty much nonsense.

Of course price/KW will drop massively if the entire thing is being propped up by taxpayer dollars and not the actual need to be profitable.

I guess I just need to resign myself to the idea that so many misguided people now believe that government can print and spend money on everything and that will always work forever.

But it won't.

udfalkso• 10 years ago

Which government are you talking about? You realize this article is not about the United States?

jahnu• 10 years ago

For other energy sources what % of the prices at each level rely on some sort of government subsidy?

comatose_kid• 10 years ago

"Oil, coal and gas received more than four times the $120 billion paid out in incentives for renewables including wind, solar and biofuels"

source: http://www.bloomberg.com/news/articles/2014-11-12/fossil-fue...

ptaipale4• 10 years ago

However, those subsidies are not paid in the same geographical and political regions at all.

Sun and wind subsidies are paid out in places like EU countries, especially Germany, where they distort the market. Gasoline on the other hand is taxed highly.

Oil, coal and gas get subsidies in places like Venezuela, Saudi Arabia, Iran or Malaysia, where they distort the market.

That Venezuela distorts its markets in some way does not really make it a good idea to distort the market in Germany (or USA) in another way.

Pxtl• 10 years ago

Of course price/KW will drop massively if the entire thing is being propped up by taxpayer dollars and not the actual need to be profitable.

If saving the world was free, the private sector would have done it already. It's not, so it needs to be subsidized.

aoeusnth1• 10 years ago

I'm not against subsidizing solar as it is politically expedient, but a more direct and cost-efficient way to help the environment would be to tax carbon emissions and let the market figure out how to save the world.

acusticthoughts• 10 years ago

THe article says that in Dubai there are no subsidies

d_theorist4• 10 years ago

This might seem like a weird thing to complain about, but am I the only person who is sick to death of headlines of the form "X just did Y"? It's the "just" I object to. It seems to be some sort of trend over the last couple of years.

I think it's to make it seem more dramatic or something. It just happened! My god!

In this case it is especially ridiculous, since the article describes something that happened over the course of 16 months.

MattBearman• 10 years ago

I was just (sorry) gonna post the same thing.

'Just' and '16 months' are pretty far apart in my mind, I found the headline quite awkward to read because of it.

d_theorist4• 10 years ago

Yes. I think headline writers are trying to force things into this form.

bemmu2• 10 years ago

Maybe people like fresh things?

Here's an A/B test I recently ran on some notification messages. There were two messages, only difference is the word "new" in there.

    A: "You received a message from the admins about your Facebook page."
    B: "You received a new message from the admins about your Facebook page."

A clickthrough 15.64%, B clickthrough 15.95%.

About 1000 samples per group. Not sure if noise.

nothrabannosir• 10 years ago

.3% on 1k? That's three people.. Yes, noise.

pjc50• 10 years ago

https://www.mccallum-layton.co.uk/tools/statistic-calculator...

  Sample Size: 1000
  Observed Proportion: 15.64%
  Confidence Level: 95%
  Confidence Interval: ±2.25
  Range for the true population proportion: 13.39% to 17.89%

It's noise.

savanaly• 10 years ago

I think it's just a more casual and less formal way of saying something happened. I can't picture an illustrious newspaper of yesteryear ever writing a headline of the form "X just did Y". But due to the rise of social media and the progressive commoditization (not using either of those terms as an epithet as so many do!) of news stories, users respond better to headlines that read like it's something their friend would say rather than being the headline of a newspaper.

I don't read Buzzfeed, the pioneer (I think?) of this trend, but I read the similar Polygon gaming news site, and two of its five lead stories at the moment sport conversational style headlines: "The Hearthstone legendary cards you must craft ASAP" and "The film Apocalypse could have looked like this".

Declanomous• 10 years ago

"X did Y" works equally as well as "X just did Y." I'm sure they use 'just' to make the article seem more immediate. "The Price of Solar Power fell 50% in 16 months" has a markedly different tone than "The price of solar power just fell 50% in 16 months". The headline with the work 'just' seems like breaking news. The other variant seems like a normal report that you can pick up an read at your leisure.

Most articles in a normal newspaper don't do this because they don't have to. Only the headline needs to be sensationalist to sell the paper. On a website, every article needs to drag people in. The current headline is click-bait. That would be forgivable if the entire article wasn't terrible as well. There is very little content or analysis, everything is cribbed from other sources, including the charts. I will give the author credit for linking all of their sources, but that is where my praise ends.

maw• 10 years ago

You've just posted an example of the recency illusion.

mattlondon• 10 years ago

Its SEO/Click-bait 101 unfortunately. It is sensationalisation of something to make it sound more interesting.

Next it will be "See what crazy change to solar made energy purchasers sit up pay attention!"

mod2• 10 years ago

But can it be improved with a "just?"

"See what crazy change to solar just made energy purchasers sit up and pay attention!"

jobu2• 10 years ago

Next it will be "See what crazy change to solar made energy purchasers sit up pay attention!"

That is _much_ worse, and I refuse to click on any link with that sort of headline because it's guaranteed to be more ads than content.

At least with the original headline I have an idea the topic is solar, and the news is the price falling significantly. Honestly I don't see the problem with the original headline.

nkrisc2• 10 years ago

"18 developments that just changed solar power forever. You won't believe number 6"

draw_down• 10 years ago

Oh good, we can whine about this instead of talking about the issue at hand. This is HN constantly now, the top comment is some nitpick more or less totally unrelated to the topic.

d_theorist4• 10 years ago

Sorry. :)

I didn't intend it to become the top comment. I just finally snapped and had to express my annoyance.

I guess I tapped into a lot of pent-up demand for the same thing.

Practicality2• 10 years ago

Isn't that how conversations work though? At least, I know most of mine work that way. Oh, hey! That reminds me of something sort of related...

JustSomeNobody• 10 years ago

I came in here to complain about this same thing. Just implies a timeline much shorter than 16 mos.

tlrobinson• 10 years ago

That depends on the timeline you're comparing it to. If previously prices dropped 50% over 10 years*, then 16 months seems pretty damn fast.

(I have no idea what historical prices of solar panels were)

Kluny• 10 years ago

Yeah, I hate it. Vote with your clicks and never touch those headlines.

coderdude• 10 years ago

Another bait-word is "quietly":

https://hn.algolia.com/?query=quietly&sort=byPopularity&pref...

Really gives you the impression that Facebook deprecated their API's official Python bindings in order to be evil. Otherwise, they would have formally alerted the press.

"X just quietly did Y" is a thing, even:

https://hn.algolia.com/?query=just%20quietly&sort=byPopulari...

stcredzero• 10 years ago

Is "just" synonymous with "recently?" I wouldn't object to that adjective being in a headline.

alex20• 10 years ago

And here in the USA some states are punishing solar customers who sell their energy, by taxing them on infrastructure costs, to protect the big energy companies. Their reasoning for taxing them is to "maintain the lines and equipment". The counter-argument to that is, "customers who consume pay taxes and fee's to maintain the lines, and on top of that, the government is giving them tax breaks to help "maintain the lines"

i get mad even thinking about it.

Same with internet, Cable, TV. The lawmakers will always try and mitigate the disruption, but all they are doing is delaying the inevitable.

maxerickson9• 10 years ago

Which states do you think have the worst solar laws?

Mvandenbergh• 10 years ago

The solution to this is to bill people separately for fixed transmission & distribution infrastructure, capacity, and electricity used. Ideally electricity used and fed back into the grid would both be constantly re-priced as well to reflect supply and demand.

FYI - most regional utilities in the US are publicly owned, not private, so I'm not sure who "the big energy companies" are.

jmcgough2• 10 years ago

My gf is an electromechanical engineer at a solar power startup (and obviously supportive of solar power initiatives).

Just asked her about this, and she said that: 1) the electrical grid wasn't designed for transferring power this way, and it can damage the grid 2) because solar power isn't a constant power source (say, a cloud blocks the sun for a minute), power companies need to keep power available for someone who's using solar. The amount of this is dictated by their peak power usage. May not seem like a big thing, but as more and more people switch to solar, they suddenly need to hold massive amounts of power, as disruptions can affect people in entire regions.

Then she started getting heavy into the physics of reactive power and my brain stopped working T_T

Anyways, there's a reason that they're charging fees for solar usage. You're using their electrical grid, and it costs money to maintain it and improve it to handle some of the new challenges of solar power.

jmcgough2• 10 years ago

Legislation around blocking non-profit internet and cable is just evil though :\

peppaz• 10 years ago

Good thing Tesla is making huge battery packs for our homes so we can ditch the grid entirely.

stale20023• 10 years ago

Solar power REDUCES peak grid usage; it does NOT increase it.

When do you think solar power is producing the most electricity? In the afternoon on a hot summer day.

When do you think peak grid electricity usage peaks? In the afternoon on a hot summer day!

Solar power helps get rid of the peak electricity usage problem. If anything, power companies should be paying solar users even more, because they are reducing costs for the power company, not increasing them.

g8oz4• 10 years ago

It goes both ways. Widespread grid-tied distributed generation can save on distribution equipment maintenance wear and tear further upstream. Neither side has honestly acknowledged or studied the trade offs.

ptaipale4• 10 years ago

Their reasoning for taxing them is to "maintain the lines and equipment".

That is a very valid reason. Solar power - like wind - is erratic in nature and has much higher requirements for the power transmission network than e.g. hydroelectric, nuclear of fossil power.

The erratic nature is even worsened by subsidies which encourage people to peak production, regardless of consumption. The way these subsidies have been implemented varies across countries, but wherever you have them, you are also inviting trouble to the power grid.

narag2• 10 years ago

That is a valid reason while they can get away with it. That won't be the case for long. As soon as the storage costs follow the panels', the grid at the current cost will be a very hard sell. Of course, providing a good location, etc.

hueving2• 10 years ago

The infrastructure belongs to the utility. Why do you feel entitled to use it for free?

It would be like demanding free Internet because you run a website lots of people visit so your upload is greater than your download.

elif• 10 years ago

Oh boo hoo.

In my state, we are not allowed to tie into the grid at all.

ProAm• 10 years ago

The counter-argument to that is, "customers who consume pay taxes and fee's to maintain the lines

It's not consumption anymore, but usage. You are using the grid infrastructure you should be required to help maintain it. It was just never an issue before now. Everyone uses the grid, the community needs to help maintain it.

rayiner• 10 years ago

In most places, power companies pay to build and maintain the grid, not the government with taxes.

samfpetersen• 10 years ago

Is this not just a symptom of oil prices dropping? Solar has to remain competitively priced or the industry is screwed

ohitsdom• 10 years ago

An entire industry can't just lower prices to meet a competitor.

rhino3692• 10 years ago

Without subsidies an industry can't not just lower prices to meet a competitor.

Especially with the sort of auction pricing in energy markets. If the going rate for energy is 5 cents a KW*hour, then you can't sell it for 6 cents.

Solar survives off subsidies in the USA. Though in places like Dubai it might be a competitive energy provider.

mtgx2• 10 years ago

No, solar installations have doubled every 2 years, which would be inline with the price dropping in half every 2 years, too.

http://cleantechnica.com/2014/07/22/exponential-growth-globa...

RivieraKid• 10 years ago

I'd guess that the profit margins were minimal before oil price drop, so lower demand for solar should not result in producers lowering their margins.

But perhaps the inputs for manufacturing solar energy are dependent on oil price (transportation etc.).

TheCoelacanth• 10 years ago

Natural gas maybe. Oil probably not since it is rarely used for electricity.

ChuckMcM10• 10 years ago

The aggressiveness of the price drops on solar is pretty amazing. I just lost one of the inverters on my grid-tie system after it had run trouble free for 13 years. So we're looking at the first "major" repair to the system I installed in 2003. And in 2003 my 5.2kW of panels on my roof cost $38,000 before subsidies and $19,000 after. 28 panels, two 2.5kW inverters, net about 4.2kW of generation.

I priced out replacing all the panels (now I can do in 10 panels what used to take 28) and the inverters with a single 5kW inverter, $7,000. My price, no subsidies. That is over 80% reduction in cost, over 13 years, of the list price of $40K.

And that is why it is a huge problem for the power companies, it makes less sense now to not have panels on your roof.

warmwaffles2• 10 years ago

How long until you start seeing a return on investment? Right now my electricity bill for my home is ~100 a month in Texas. I would need to keep the same panels without maintenance fees for 33.33 years by your price point of 40k

schrodinger• 10 years ago

You can also sell electricity generated by your panels back to the grid.

qaq• 10 years ago

Y but now it's 7K and not 40K.

krschultz• 10 years ago

Payback of 6 years with the new cost, even for your low electric bill.

michaelbuckbee• 10 years ago

I've been trying to do this calculation myself. One factor I hadn't initially put in was the fact that I didn't need to think about a backup generator for our (east coast) storms.

1024core• 10 years ago

33.3333 * 7 / 40 = 5.83 years

Osiris30• 10 years ago

I keep a close look at the economic of rooftop pricing in TX - it's still not profitable switching but getting close.

Cons: - Retail cost of electricity is already v low in most of TX (Houston, Dallas) - so it's hard to compete. - not much competition in the solar rooftop installation space (due to first point above) - No net metering policies in Houston, Dallas.

Pros - High solar yield

cmarschner• 10 years ago

ROI can only be one factor. The other is that you are suddenly using clean energy. Doesn't this make you feel better?

ChuckMcM10• 10 years ago

That is a slightly more nuanced question than you might think.

First, I work from a baseline cost of $19K, even though the list price was closer to $40K I didn't pay that for the system so I use the actual cost in my calculations.

Second there is the point where the money you've saved is equal to the money you paid, we hit that point about 10 years in. And then, depending on the life of your system (which has "positive cashflow" at that point) determines your overall rate of return. The replacment inverter (which is actually going to replace both inverters) is $2K ("upgrade" pricing from the manufacturer) And as the inverter was failing our system was under performing (so not generating as much power). The question will be how much longer am I willing to run the panels. The warranty is 25 years, so in theory another 10 years but the manufacturer (Sharp) no longer makes them and cannot replace them under warranty (they can only offer to repay you to buy a panel from some other vendor with equivalent specs and size).

So from a money perspective, had I used the $19K and put it into an S&P 500 ETF in 2003, it would have doubled by now (SPX was 1,008 in 2003, its over 2,016 today). So "bad investment" comparatively. If the panels continue for an additional 8 years and PG&E's costs stay about the same then I'll have generated about $20K in value from them so that would pencil out to a ARR of about 3.5%. Initially I funded the panels with a refinance of the house loan and that was at 6% but that has since been refinanced even lower. However had it not been, at my original purchase I'd still be running a deficit trying to both pay back the house and generate cash from the solar.

Interestingly for me, with the $7K it would cost to re-implement that system today, and 4% mortgage rates, it would have a rate of return of closer to 14% (10% if you subtract 4% as the cost of capital for a mortgage refi) and pay for itself in a bit more than 3 years and have doubled the return in 6. The challenge is additional regulatory changes which get incorporated into new installations versus the regulation regime I operate under based on my 2003 install date. I wonder sometimes what the trigger is for resetting the project's origin date.

kayoone• 10 years ago

Ops point was that the original price of 40k in 2003 is now 7k for the total installation. That will change your math somewhat :) So even with your low power bill it's more like 6 years.

amelius• 10 years ago

How long until you start seeing a return on investment?

Why can't the utility companies do the financing (upfront investment), place them on our roofs, and get a little bit of the profit? Seems like a win-win situation.

And otherwise government, or specialized banks?

m3mnoch• 10 years ago

this argument kind of annoys me.

"yeah, but how long before you see a return on investment?"

how about instantly?

this is what we did:

1) calculated our monthly electricity payment: $160 or so a month.

2) priced out solar to push our payment to net-zero-ish: the savings really start multiplying once you get down into the regulated tiers.

3) replaced our electricity bill with a solar installation loan.

what did we get in return?

instant insulation from rate hikes: http://business.time.com/2011/12/16/plugged-in-then-pay-up-e...

instant equity on our house.

oh, and look! i can now have a solar-powered car!

but yeah, if i happen to still live in this house in 15 years, sure, no electricity bill. and, i'm sure somewhere along the line i'll end up "making all my money back".

ryanmarsh• 10 years ago

$100 a month in the summer in Texas? You living in a shoe box in the panhandle or what? I spend $700 a month in August. Tell us your secret for real.

thechao• 10 years ago

Is this DIY, or installed? If it's not DIY, mind passing along who you're using? Inquiring TX minds would like to know!

ChuckMcM10• 10 years ago

My wife and I designed the system but it was installed by a Los Gatos company that did not survive. As part of our education efforts, my wife completed a program to become a certified solar installer (you needed to be certified to get the full rebate at the time) but one of the women she met in the class was working at this company and it just made sense to give them the job to help them bootstrapping their company.

thinkcontext• 10 years ago

Why not replace your current panels with new ones? If you can generate nearly 3 times as much electricity with the same roof footprint and be able to reuse your racks and electrical installation, you should be able to be in the black in no time.

ChuckMcM10• 10 years ago

Sort of, and sort of not.

I am already "in the black" as it were since the system has already provided more value than it cost to install and maintain. So no worries there. But 325W panels are physically larger than 185W panels (not twice as large but still) so replacing the 28 panels on the roof with them would get my raw input up to 9.1kW but I'd need roughly 33% more surface area. That would add another strut on the mounting system and the top row of panels would extend beyond the peak of the roof (now disallowed by the building code). However, it would be "easy" get get 16 in there, which would be an equivalent raw foot print (5,200 watts)

coryfklein3• 10 years ago

And that is why it is a huge problem for the power companies

It is a problem, but not necessarily in the way you may be thinking. Peak residential power usage is in the evening when solar isn't available. Power companies therefore end up spinning down coal and natural gas during peak solar, then just spinning them back up again as the sun begins to set. [1]

So you haven't replaced the coal and natural gas plants, you're just running them less. This results in higher overall costs, because you pay $$$ to build huge plants then just let them sit most of the day, which results in higher per-watt cost of non-solar power because the infrastructure and maintenance is no longer amortized over whole-day usage.

[1] My friend, a manager of 30 years at a huge mid-west power company

adamweld• 10 years ago

Which is exactly why Tesla and other companies are investing in residential power banks. They have the potential for huge efficiency gains across the grid.

epistasis11• 10 years ago

Being a manager at a large power company for 30 years is both an advantage and a disadvantage. For the past 30 years, the energy industry has changed incredibly slowly, so ones expectations of what is possible in the way of innovation is far far lower than it should be.

The "duck curve" that your friend is referring to will be solved in a variety of ways, from wind to storage to HVDC interconnects to the rest of the nation, to peaker plants.

In the future, coal is dead. No need to build any more of it. Nuclear is too expensive to build anymore. (Unless somebody actually does thorium innovation, but I'm not holding my breath...)

When storing a kWh costs $0.10, and there's also adaptive pricing to match supply and demand better, these problems will melt away.

It does require a huge mental shift, but the cost savings will make that happen

noir_lord• 10 years ago

Peak residential power usage is in the evening when solar isn't available.

Assuming it's not a battery backed system, prices on those are dropping (or more correctly remaining stable while capacity slowly climbs).

S_A_P2• 10 years ago

Can validate. The problem with electricity is that there is no large scale storage like there is for other forms of energy like NG and Crude. Until someone comes along and figures out how to store electricity, this will continue to cause grief to power companies. Power plants are really just options, if the price per kWh is at a certain point then it makes sense to spin up or take down a plant and generate power. Adding a bunch of highly variant generation to the grid can make the market more volatile since there could be a lot of up and down with generation facilities.[0]

That said, there will be teething pains but this is a net positive thing that is happening. Growing up I lumped solar into the perpetual 10 years away category. It looks like I am going to see solar be competitive after all.

[0] I implement trading and risk management software in the energy sector, including Crude, NGL, NG, and electic.

jackcosgrove• 10 years ago

I would propose a global power grid as a solution to this problem, on which the sun would never set. The only problem is that earth is not set up well for this: the Sahara would be the solar workhorse of the planet, and the consumer of all this power would be Hawaii.

walrus01• 10 years ago

The major challenge now is no longer PV and gridtie inverters, but energy storage. Whether it's batteries, pumped storage hydroelectric, whatever.

$$$ per kWh stored (and the lifetime/cycle life + operating costs of that storage) is a key benchmark.

puranjay• 10 years ago

Wait 5 more years and batteries will become cheap enough to even remove that constraint

manishsharan• 10 years ago

I am clearly out of my depth here but what if we take the newly daytime unused/idle coal power or natural gas power for other endeavors like sea water desalination or just pumping up water into a watertower when daytime energy cost is low and adding increased hydro capacity in the evening when the energy cost is higher?

daveheq2• 10 years ago

The power companies can get overflow from solar and wind and water and redistribute it at a profit while paying the residential over suppliers. It's on the power companies to build the infrastructure like batteries to take advantage of all this free new power.

g8oz4• 10 years ago

"Lets not move forward until every conceivable issue is solved" - said every entrenched interest ever.

serge2k• 10 years ago

This is why we need a major leap in battery tech to make solar more viable.

Plus there is the problems of cities with not enough sunshine and otherwise problematic weather (snow on the panels).

Spooky232• 10 years ago

That's a good thing. Peak power usage is midday, so providing additional supply at that time avoids the need to site new plants, which costs millions or billions of dollars.

It also makes coal less economical and makes gas plants, which are cleaner and safer to operate more economical.

qwtel• 10 years ago

Sorry for the noob question, but isn't there always sun somewhere on the planet? Are electricity grids not globally connected, or would it be lost in transmission?

tedsanders• 10 years ago

This claim about peak power usage is untrue, at least for California. For the past 20 years in California, the annual peak electricity usage has ALWAYS occurred between 2pm and 5pm.:

https://www.caiso.com/Documents/CaliforniaISOPeakLoadHistory...

I used to work at a power company as well.

(It's true that the daily peak is in the evening and that won't be helped by solar. But capacity is built to handle the annual peak, not the daily peak, and because the annual peak tends to be hot afternoons, solar actually will replace other generation in the long run.)

jfoutz• 10 years ago

Well, you could just massively overproduce solar, and use the excess to pump water up a hill. Also, I think there are certain externalities with coal that your friend never had to pay for, like Mercury poisoning. Reducing the amount of time coal plants run may be beneficial to reduce those externalities.

WalterBright• 10 years ago

There is another way - minute by minute pricing. Much of the electric power usage is not required to be right now, and can be deferred - running the refrigerator, A/C, hotwater heater, dishwasher, charging the car, etc. With real time spot pricing information available, the deferrable usages can be deferred until the spot price is cheap.

I bet this could even out demand quite a bit.

With the current flat rate pricing structure, there is no incentive whatsoever to shift demand to blunt spikes.

RutZap• 10 years ago

Peak residential power usage is in the evening when solar isn't available. Power companies therefore end up spinning down coal and natural gas during peak solar, then just spinning them back up again as the sun begins to set.

Would it be possible (in an utopian world) to actually have a global power network and route electricity produced during the day in one area across multiple timezones to an area where the demand is greater and no available solar? e.g. Electricity produced in West Africa at noon to be delivered to .. Tokyo, where it would be 9PM.

I understand that politically this is almost impossible, but I am curious whether there are any technological impediments for this to be feasible.

mtgx2• 10 years ago

Not too long ago some of the comments here were saying "how will we feed all of those millions of EVs out there if the EVs do end up replacing most ice cars?"

Well that's the utilities opportunity to survive. Utilities should actually lobby against ICE cars and pro-EVs. They will be the ones charging EVs everywhere. Not everyone will afford to charge their own EV at home where they have solar panels.

antoniotamer• 10 years ago

Would you be able to share what company quoted you for $7k? I'm going to be getting quotes on a solar installation, and your quoted price seems rather good. Do you get to reuse parts of your old installation?

ChuckMcM10• 10 years ago

Well in my case we already have the mounting equipment on the roof and wiring. And we were looking at new panels and a new grid-tie inverter, so 16 x 325W Kyocera panels was $5,600 and the SMA Sunnyboy 5Kw inverter was $1900 (total $7,500).

I would not expect a company to quote a new install for that price since they will have to add the mounting system and pay their installers for a day's labor getting everything set up.

[1] http://www.solar-electric.com/

aagha• 10 years ago

Other than the fact that $7k still isn't that cheap (for many people)--how long does the "average" home of 4 take to recoup that cost?

I think the barrier is not only cost, but also know-how. Few people are likely to tackle a challenging project like this with a $7k out-lay.

kriro• 10 years ago

The huge power companies still control the grid in many countries though. I hope improvements in batteries/storage will remedy this and we'll shift towards community grids of sorts. You'll still need the traditional grid for peaks but the power is shifting (pun non intended). It's a great development, I haven't looked into the net power needed to produce solar/photovoltaics panels but it was dropping quite a bit as well.

I'm a bit surprised there are no mini wind turbines. I read about some promising developments (with close to 0 noise output) but it seems to have fizzled.

luckydude• 10 years ago

Hey Chuck, I've been waiting for solar to come down and it sounds like it has. When you priced it, was it just for parts or was that $7K installed?

And for the do-it-yourselfers, how much of the cost is installation now? Is it practical to do most of the grunt work yourself and then get an electrician in to do the final part?

ChuckMcM10• 10 years ago

As mentioned elsewhere it was just parts. Installation of grid tie systems isn't hard but does have a number of building code things you have to follow (at least in California). At the time we did the install my wife took a solar installer's course which went over the current code.

I can recommend that as a plan of action, find a local group offering job training as a solar installer and take it. Then using that knowledge you can design an installation that meets your local code.

maxharris• 10 years ago

The availability of solar power at night or on cloudy days just improved 0% in 16 months.

Saying that solar is okay because it's hooked up to the grid is not an answer, because that's just another instance of a reliable energy source (fossil fuels, nuclear, hydro) bailing out an unreliable one (solar, wind).

durkie• 10 years ago

this is the same as the "electric cars are actually powered by coal!" argument. it seems like it ignores all side effects of an incremental improvement in pricing/availability of technology: proliferation of EVs leads to removal of internal-combustion cars (all point sources of pollution), in turn leading to lots of cars dependent on the grid for power, in turn leading to that cleaning up power plants instantly cleans up millions of cars.

by the same token, price reductions in solar power cost leads to battery storage systems (or other storage systems) being even more desirable and cost-competitive, in turn leading to them being installed in preference over other types of power plants.

Practicality2• 10 years ago

I don't understand why this is a problem. Two things:

1) You're still using MUCH less overall fossil fuels. A 40% reduction in fossil fuel use would do wonders for the world economy and be a huge step forward in reducing emissions. 2) If other people are feeding power back into the grid, then you can be using their solar power. It's sunny somewhere, right?

hueving2• 10 years ago

That same argument could be used to advocate everyone running diesel generators at home 24/7 because of the power outages that occur on the grid.

Sure, coal and gas pickup the remaining tab, but even if they are covering half of the usage, that's better than all of it.

heygrady• 10 years ago

http://cleantechnica.com/2015/08/10/adding-energy-storage-to...

You can add a battery backup system to cover night-time usage on your own home. The $10k battery system basically doubles the price. But since the solar panel's price just dropped by 50%... Cloudy days you might still be in a deficit.

What is so wrong with a mixed system that uses renewables where it makes sense and relies on other sources to fill in whatever gaps appear?

neves• 10 years ago

If you decide to go out of the grid almost completely, and buy batteries to store your energy. Have any idea about how much you'd spend?

ams61102• 10 years ago

Even with recent developments, being totally off-grid only makes sense when it's your only option (remote rural cabin, etc).

Solar panels with enough battery backup, plus an alternate generator (gas or diesel) for times when it's overcast for longer than your battery reserve are still going to have a very long payback time if utility power is an option.

There's a reason utilities exist, after all. It's always been possible to have your own electrical generator, it's just way more cost-efficient to do that at utility scale. That will likely continue to be the case with solar and batteries.

brianbreslin• 10 years ago

In some states, the utilities don't let you sell back I think (Florida being one. we have a super friendly power lobby here. /sarcasm). But I am curious about the cost and hurricane proofing of a set of panels + battery backup. My parents would totally buy a combo for their house if they knew it wouldn't get ripped off in a storm.

efields• 10 years ago

Curious… does it ever get low enough that electric heat becomes desirable? We moved into a place that had electric heat on the ground floor, ran it the first cold month, saw the bill, then made it a purely "on demand" heating solution. The rest of the apartment was gas forced hot air, which was on a normal schedule.

To heat a whole home in a Boston winter seems like it might cost $1000 or so. Is it reasonable to expect rooftop solar to ever generate that much electricity?

sgt101• 10 years ago

Three issues - in the winter the days are shorter, the weather is cloudy and it's cold at night. So maybe you could do something with storage heaters, but I'm not feeling optimistic.

antisthenes2• 10 years ago

Boston is not the best place to generate solar PV energy. Nor is it a good place to live in a suburban style (town)house, considering how much more efficient condos are in terms of heating and efficiency.

When you start with one of the worst possible use cases of solar, you can't expect great results.

Electric heating is great for individual rooms, not for whole house heating.

maxerickson9• 10 years ago

An air source heat pump might make more sense than just using the electricity (they often provide 3 units of heat for each unit of electricity, a COP of 3 compared to 1 for resistive heating). It depends on how much summer power could be sold for and how much all the things cost.

Newer ones would work fine for most of the Boston winter.

yourapostasy4• 10 years ago

In places that cold, the gist I get from reading about heating/cooling is you are better off bringing down your air changes per hour [1] (a function of how airtight your residence is), then insulating (including nearly eliminating all thermal bridges), then passive heating, then active heating, in that order.

I've read field reports of people with measured air changes per hour that meet the PassivHaus standard, with 60+ R-value insulation (again, PassivHaus standard), isolated the foundation with insulation, consolidated all possible thermal bridges into a single, small conduit, and heat input from passive solar concentrator, enjoying NE US winters with only double-digit gas/electric bills for active heating in the worst months. With a rocket stove, most could avoid even that nominal amount and take care of burning their brush pile at the same time.

The insulation will cost you upfront, though. Corning FOAMGLAS is my favorite at the moment because it doesn't involve greenhouse gases during its manufacture, but it and its installation can easily add 15% to your overall build cost. Use EPS (looks like giant styrofoam blocks roughly the size of 3 feet thick doorways, wish all the styrofoam we throw away into landfills could somehow be recycled into these) instead, and you still are looking at around a 10% upcharge. Granted, you're hovering around 70'ish R-value with that much, and thermal changes take a much longer time compared to conventional residences.

[1] https://en.wikipedia.org/wiki/Air_changes_per_hour

kragen15• 10 years ago

A really interesting thing about this is that the price of solar panels has changed almost not at all in those 16 months: http://www.solarserver.com/service/pvx-spot-market-price-ind... shows that it's 0.49 to 0.63 € / Wp today, while 16 months earlier, it was 0.45 to 0.62. This is a dramatic contrast from the continuous 36% per year reductions from 2009 to 2012.

In large part because it's night half of the time, solar has a pretty low capacity factor, like in the 20% range (see https://en.wikipedia.org/wiki/Capacity_factor for details) so it matters whether this is 800MW peak or 800MW average. I think it's peak, which means that we're talking about something in the range of US$400M to US$500M worth of solar panels at current prices — which are the same prices as in 2014, when bids were twice as high! With a 35% capacity factor (Dubai is equatorial and sunny, although even Arizona only gets 19%), this project will have only 800 MW * 35% * $ 0.0299/kWh = US$73.4M/year of revenue, which is only a 16% return on investment — or ⅓ that, at 5⅓%, if we assume that the non-module costs of the project amount to ⅔ of the total cost, as shown in the bargraph on the article.

So, is the winning bidder (strangely, not named in the article!) really willing to accept a 5⅓% IRR for this investment, because PV solar park competition is really that cutthroat? Or are they betting that by the time they have to buy the modules, the prices will have fallen (returning to their former exponential decline?), and/or that the notorious "soft costs" that eat up half the project cost are becoming cheaper?

There's no real floor on the cost of silicon photovoltaic modules, since almost all of the cost of producing them from raw materials is energy, not the materials themselves.

maxerickson9• 10 years ago

It seems part of the story was crystal production getting ahead of demand.

https://en.wikipedia.org/wiki/Polycrystalline_silicon#Capaci...

The price graph a little lower is interesting.

kragen15• 10 years ago

Thank you! I remember that catastrophic price spike. Note that in the 2009 to 2012 timeframe, though, the polysilicon price was relatively stable (declining only by half), and it's declined since then, so polysilicon pricing is only part of the story.

cakeface• 10 years ago

How much of these low bids in Dubai are due to the low cost of labor there? Also I am guessing that various building regulations are significantly cheaper to meet than in the US. I remember reading about the huge building boom in Dubai being possible because of large groups of extremely low paid laborers. I'd guess any other utility project in Dubai would benefit from this as well.

That isn't to say that there aren't improvements in solar cost. There are improvements. I just wouldn't compare a bid in Texas to one in Dubai.

toephu2• 10 years ago

Unfortunately the price of solar hasn't dropped that much in California, and may take some time.

If you get a bid from a solar company they almost never give you the cost per watt (at least for the 5 companies I got bids from), but you should do that calculation yourself and then compare against the average in California to see if they are ripping you off:

https://www.californiasolarstatistics.ca.gov/

logicallee• 10 years ago

There is a nuanced economic issue related to this priced drop.

Today, (and for some time in the past) solar panels can be an investment, that is paid off by the amount that is saved by not having to use the grid (for example.)

So a homeowner might calculate that by investing $20,000 in solar panelling today, they can have a 100% return within 72 months (6 years). It's free if they manage to use it for 6 years. Afterward the fact that this paneling is installed is "profit" - they get the ongoing money from their savings.

So they are motivated by self-interest to make this investment, even if they assign "$0" to how much it's worth to them to reduce their carbon footprint on the planet; they don't have to care.

But look at what happens if they consider that the investment price will drop by 50% in the next 18 months. Then they will have a 100% return in 36 months, plus the 18 months they wait means their investment is repaid in 54 instead of 72 months. Or, perhaps, they can install twice the paneling in 18 months. Either way their ROI is better.

So that means for the next 18 months they are simply continuing to use the grid, which might have a higher carbon footprint. This might, paradoxically, drop adoption of solar paneling today (depending on people's expectation of the price change in the future.)

mmanfrin• 10 years ago

So then you consider that others are logical actors, and will follow to the same conclusion; meaning that the price won't drop in 18 months and is therefore the proper investment now.

But then you think that others will think this too, so then you should wait.

And then you remember that you should never go in against a Sicilian when death is on the line.

Clobbersmith• 10 years ago

How can something "just drop" over 16 months? I think it's amazing that solar is becoming more affordable, but a year and a half is hardly sudden.

therealdrag0• 10 years ago

I'm curious as to the reasons behind the drop, and if that has anything to do with solar being solar. Could the same thing have happened for wind or nuclear given certain social and political pressures and incentives to innovate and mass-produce?

sc90• 10 years ago

How low would it have dropped minus incentives/subsidies?

ry_ry• 10 years ago

Solar remains a long-term choice, though.

I love the idea, but I'll have sold my current house before a suite of solar panels pays for itself, and from my limited knowledge, the price of solar-equipped houses doesn't reflect the investment before it's paid for itself.

Disclosure: UK, we have no sunshine.

downandout• 10 years ago

"One can suspect that Masdar had access to long-term financing through the wealthy emirate of Abu Dhabi that no commercial banks, the primary source of capital for the other bidders, could match in cost."

I was excited by this headline until I read the article. This price drop is the result of advances in financial - not technical - engineering. It means nothing for the cost of solar outside of this specific deal, as below-market interest rates are just more subsidies. This is yet another eco-clickbait headline.

SFJulie• 10 years ago

I hate these stupid work hours anyway that create this stupid habit of burning energy when it is not "naturally available".

Couldn't changing the business hour according to the sun and wind be the real cost killer?

No technologies, no investments involved, it just requires one smart boss, some smart accountant and employees.

Imagine it: people would have no way to avoid raising their kids during the down season, we could fire teacher, single could do art, we could stop funding culture and it would be popular culture, maybe science, less working hours, but more people would have to work.

It would solve quite a few problem.

daveheq2• 10 years ago

And the world marches ahead of America

Animats• 10 years ago

It's time to get most air conditioning load onto solar. In the US, areas south of 37° (central California across to everything south of Virginia) should have enough local solar power to drive daytime air conditioning. For that, we don't need storage, we don't need to feed much power back into the grid, and air conditioning is the big residential load. 21% of electricity consumption in the South is for air conditioning. This is a no-brainer right now.

Here's an application for "smart power" technology. When a cloud comes over and blocks the sun, air conditioner compressors should shut down temporarily. If the cloud cover remains, start up again, on a somewhat random time delay, to give generators time to respond. (This will probably be implemented with some overly complex system that involves "the cloud", rather than being done by a simple broadcast signal.)

lucasmullens• 10 years ago

Google Project Sunroof can tell you if you should invest in solar based on your roof area [0]

[0] https://www.google.com/get/sunroof

martinald• 10 years ago

This headline is beyond misleading. The reason this bid was so low that it is financed by a state owned company in Abu Dhabi.

The cost of capital is the most important thing on these projects. If you're getting below market capital financing then no shit, prices are going to fall a lot.

einarvollset• 10 years ago

Without even reading comments: the naysayers are talking about peak demand when the sun is not shining. What they're missing: distributed, fault tolerant energy storage using eg Tesla powerwall.

Iv• 10 years ago

Pretty trivial remark, but when the prices are so low, leading to most prices have two trailing zeros, couldn't we maybe switch for another unit than $/kWh ? Maybe $/MWh ? So we are currently at 29.9$/MWh.

For information, the average household in the world uses 3 MWh per year and a typical US one does a bit more than 10 MWh. Advanced and ecologically minded countries like Germany go down to 3 MWh.

Keep in mind that the location is important. Dubai has a lot of sun, you would not get this price with the same tech in, say, Canada.

ksec• 10 years ago

What about land cost? Do the cost stated there include land cost? What about in places where land is expensive?

disposeofnick95• 10 years ago

The price of raw cells are super cheap now and if you're willing to reearch, engineering and DIY, you can build great panels for even cheaper. As many large projects come online, both li-ion and solar are going to fall through the floor faster than Moore's Law for some time, and the slow down.

I suspect solar deployment will take the US by surprise, because of the compelling economics.

Hint: go long on SCTY

wesleyd2• 10 years ago

The idea of an always-on grid sized for peak demand is going to seem hopelessly anachronistic in just a few years. Third world power grids - frequent outages, sized for average load, cheap in every sense, barely regulated - are the future

wesleyd2• 10 years ago

It still amazes me that here in silicon valley, no available electricity tariff reflects the timing of the supposed solar glut.

The price of solar power just fell 50% in 16 months

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