Solar PV rapidly becoming the cheapest option to generate electricity

http://www.grist.org/solar-power/2011-10-11-solar-pv-rapidly-becoming-cheapest-option-generate-electricity

by ph0rque • 15 years ago

125 102 15 years ago

grist.org

00joe3• 15 years ago

sunelec.com, PV Panels $1.28 Peak watt, Inverter $0.5 watt, Rails and Cables $0.27 watt.

In my area I expect to save .18 cents per year per peak watt.

Prices have been falling at 1-2 cents a week since june.

http://pvinsights.com/

droithomme7• 15 years ago

This is true for deep space satellites and locations where running a power line is cost prohibitive, such as weather monitoring stations in Antarctica.

CapitalistCartr• 15 years ago

It's also true in parts of Florida. In rural areas, PV can be cheaper than paying the power company to run out their lines. I expect, in five years, it'll be worth my while to put them on my house, in the middle of the city.

pingswept4• 15 years ago

I've found Travis Bradford's book Solar Revolution to give a good overview of the solar industry, with the same numerate feel as this article: http://www.prometheus.org/research/solarrev

The best rebuttal I've heard (to renewables generally, not PV specifically) is the second to last chapter of Matt Ridley's The Rational Optimist: http://www.rationaloptimist.com/books/rational-optimist-how-...

(Sorry I can't link directly to the content, but so far as I know, it's not available online in either case.)

Lost_BiomedE• 15 years ago

Thanks. I will have to get 'The Rational Optimist'. Matt Ridley's book 'Nature via Nurture' impacted me a lot when it first came out.

The online course 'Physics for Future Presidents' taught me a lot about how to evaluate energy sources. I would recommend it to anyone interested in learning the physics concepts behind many hotly debated areas, whom currently has little knowledge or exposure in this area.

schiffern• 15 years ago

As far as Matt Ridley's writing, can you speak to whether these are the same arguments: http://online.wsj.com/article/SB1000142405274870342120457632... ?

Summarized, Ridley argues here that the "renewable/non-renewable" distinction is quantitative (not qualitative), and that renewable energy harvesting devices are built from non-renewable materials.

pingswept4• 15 years ago

Some of the arguments in that article are repeated in the book, but it's not the main thrust of the chapter I was referring to. I'm afraid I gave the book to my brother after I read it, so I can't give you an authoritative summary of the arguments in the book. As best as I can recall, the argument was renewables generally have such low power density (W/m^2) and high energy cost ($/J) that they are unlikely to be an effective solution to climate change, should climate change be as severe as we fear it might be. (Ridley is not a climate change denier, but he does think scientists' worst fears are exaggerated.

Here's an audio interview with Ridley that might cover some of the same stuff in the book: http://www.econtalk.org/archives/2010/10/ridley_on_trade.htm...

marze10• 15 years ago

It is surprising how little attention has been created by this huge PV panel price decrease, from $4.00 a watt to $1.25 in three years.

Solyndra is an early casualty, since their business model depended on PV panel prices to fall much more slowly.

The economics of home based solar electricity depends on three numbers, the panel price, the local retail electric rate, and the interest rate of the loan for the system. Right now, in much of the US, you can see that a PV system makes sense for new construction. A simple example:

  $12500 : 4500 W PV system w/no storage (grid backed up)

  4% interest rate, payment of $60/month

  $0.11 per kwh avoided cost, the system generates about $70 of electricity/month

In a nutshell, this is grid parity, right now in 2011. And the owner of such a system does not need to worry about utilities increasing their rates over the years.

droithomme7• 15 years ago

Thanks. Could you explain in more detail how and under what conditions (location, type of system) a 4500W panel system generates 70/.11 = 636 kWH of power each month?

00joe3• 15 years ago

In Tampa FL with optimal tilt and no shade a panel rated at 1 peak watt would generate 5.3 watts a day X 30.4 days a month * 4500w panels = 725 Kw per month

marze10• 15 years ago

Sure, a reasonable location (not Seattle), you might expect 5 hours of "peak solar equivalent" sunshine per day on average.

5 hr * 4.5 kw * 30 days/month = 675 kwh/month

gvb• 15 years ago

That $60/month is over a 30 year period, which is a pretty long payback.

On the positive side, electricity prices will probably go up. On the negative side, the PV cells will likely deteriorate at a 0.5 to 1% rate[1]. At 0.5%/year, 30 years would be 86% original rating (not bad). At 1%/year, 30 years would be 74% original rating (still fairly effective).

[1] http://info.cat.org.uk/questions/pv/life-expectancy-solar-PV...

marze10• 15 years ago

The point is the homeowner saves money from day one, not even taking into account current rebates.

The utility bill savings more then compensate for the extra $60 in the monthly loan payment.

Most solar panels come with a 25 year warranty.

brc4• 15 years ago

Does your example include a FIT (feed in tariff) provided by government at a much higher rate than grid power, or are you doing a calculations at grid power? A lot of places have a high FIT value currently, but this is subject to political whims and any incoming government might find it easy to gain votes by trimming the FIT, as has already happened in many places around the world.

Another huge problem with these calculations is the very small fraction of people who stay in one house for more than 10 years. Essentially you have to stay in the house for the entire payback period or you've lost out.

Personally I think the solar price will have to drop to the point where it is much lower than grid (with no subsidies), rather than just about equal. At that point, takeup will be much higher.

compman775• 15 years ago

Why would you have lost out? Couldn't you sell the house for more than you could have if you hadn't had solar panels installed?

marze10• 15 years ago

No, just avoided cost. Unless your utility drops the rates significantly, the savings are locked in.

As far as moving goes, studies show that solar systems increase the value of a house by approximately the cost of the system. Of course, if solar system prices fall as expected, this premium would likely drop also.

And the economics are the same for a system where the cost is rolled into a loan during a home loan refinance, an option available to many people now.

onedognight• 15 years ago

> It is surprising how little attention has been created by this huge PV panel price decrease, from $4.00 a watt to $1.25 in three years.

The sad thing is that First Solar's thin film panels hit $1/watt a few years ago, but you are unable to buy them in the US due to Solar City getting an exclusive and deciding to only leasing them at nowhere $1/watt.

aptwebapps• 15 years ago

If some company rolled out production right now for 50 cents a watt, unless their volume was ridiculously high or their tech looked easy to copy it wouldn't have that much affect on the market price. Why? Because they don't have to sell it at 50 cents, they can just sell it at market rate. Only when more than one (at least) company has the ability to sell for 50 cents is the price likely to approach that.

grannyg00se• 15 years ago

Aren't you missing another very important number? Avg # of sunny dys per mth. The system is going to generate near $0 of electricity per mth if the pv sees little sun exposure.

speleding2• 15 years ago

> And the owner of such a system does not need to worry about utilities increasing their rates over the years.

That's not how it works unfortunately. Most of the cost of a utility are fixed. If more people are using PV then the fixed cost get divided over a smaller number of kWh and the cost of the remaining non-PV kWh goes up. Since peak usage in most countries is when it's dark the utility will not be able to reduce its fixed cost until someone finds a way to store energy in an economical way. The utility will simply have to stop paying for electricity delivered back to the grid because they will no longer be able to afford it (the only reason they do that now is politically motivated).

khafra• 15 years ago

> peak usage in most countries is when it's dark

Citation needed.

http://www.srpnet.com/prices/home/tou.aspx

Looks to me like most of the peak hours are when the sun's out; especially in the areas where PV panels work best.

ars• 15 years ago

Too many assumptions. The biggest of course is that that "22%" number will continue despite the fact that "the learning rate has been exceptionally high".

Another assumption is that natural gas prices will stay the same, when actually they are going down right now.

Not an assumption but rather an omission: He uses a 25 year payback period for solar, but does not include opportunity cost of that money (i.e. how much that money would have brought in interest) over 25 years. Once you include that (and you should) it doesn't look as good. And in any case 25 years is far too long. 10 years is the standard for evaluating payback periods.

6% over 25 years is 4.5 time the base value. So the solar power actually costs 4.5 times as much as he assumes. Even assuming just 3% would give you 2.1 times your cost.

Edit: These calculations are a bit off since they assume paying for the standard power all at once at the end, but actually you make payments throughout.

biot2• 15 years ago

He says that $700 worth of solar cells would produce 4000kWh of electricity per year which is what the average family consumes. Over the course of 25 years ("a lifetime of household electricity") had you purchased that from the grid, it would have cost $25,000. Ignoring maintenance, you get $25,000 worth of electricity for an initial one-time investment of $700. Though that's production cost, and excludes installation, maintenance, etc. so likely multiples of that at retail.

I think you misread the 25 years as being a payback period.

anamax4• 15 years ago

> Ignoring maintenance, you get $25,000 worth of electricity for an initial one-time investment of $700. Though that's production cost, and excludes installation, maintenance, etc. so likely multiples of that at retail.

Something is wrong here. Installation is maybe $3k. The typical retail markup is 2x. So, let's call it $5k.

25 years of 4,000kWH is 100,000kWH. $25K means $0.25/kWH, which seems high.

CHsurfer• 15 years ago

These solar panels are made with many of the same technologies used to make computer chips (or wafers) and much of the rapid cost reduction was possible because the PV industry benefited from the chip producer's R&D efforts without incurring the cost. This effect makes it reasonable to expect similar improvements over the next ten years - as long as there is still a market to justify the costs of transferring the learnings from the wafer fabs to the PV panel fabs.

Natural Gas prices took a dip because the energy demand curve took a dip in 2009 and most importantly, a relatively new source of of Natural Gas has been developed in North America, which had previously been a major importer. (http://ferc.gov/industries/gas/indus-act/lng.asp).

Most new power plants in North America and Europe are Combined Cycle Gas Turbines as the relatively low up-front investment, flexibility and (currently)low fuel costs make them the best solution. This should prevent Gas prices from dropping much further. When/if the economy picks back up, the increased demand should further solidify the price of gas.

Of course, if the energy supplied by wind and PV grows faster than the overall demand, then this will reduce the demand for Gas, thus keeping prices low.

redwood• 15 years ago

Also assumes some kid doesn't throw a brick onto your roof (etc)

roel_v7• 15 years ago

Insurance. A few dollars/month.

rmason3• 15 years ago

He's making way too many assumptions. In 1894 a writer said that at then current rates of population expansion in fifty years the streets of London would be buried in horse manure.

http://www.thefreemanonline.org/columns/our-economic-past-th...

Course he didn't foresee the advent of the automobile. Breakthoughs like the horseless carriage come out of nowhere. Something like Thorium could end up generating ultra cheap electricity and in fifty years solar might end up being thought of as a quaint technology like buggy whips.

Our goal for the US should be energy independence, not a slavic devotion to a specific technology.

marze10• 15 years ago

Since solar is less than 1% of US electricity generation, it is unclear why you interpret this to be "a slavic devotion to a specific technology".

Solar is the ultimate option of energy independence, since as the OP discusses, 30 lbs of sand turned into solar cells will power a house for three decades or more.

temphn• 15 years ago

But it's hard to store energy and to transmit it across long distances. This is the fundamental problem with solar and wind. You can put one of China's new thorium [1] or pebble bed [2] reactors anywhere on the face of the earth, and the wattage per surface area ratio relative to solar will be a great deal less.

Solar will likely be some part of the answer but it's always going to be niche relative to oil, coal, nuclear, and (where the region allows it) geothermal/hydroelectric.

The question that only experts in the space could answer is whether the $1.25 price per Watt is due to a real decrease in the price of fundamental components/manufacturing processes or whether it is due to subsidies of some kind.

[1] http://www.telegraph.co.uk/finance/comment/ambroseevans_prit...

[2] http://www.nytimes.com/2011/03/25/business/global/25chinasid...

rmason3• 15 years ago

I was referring to government spending on wind and solar companies to the exclusion of competing technologies.

Note I am not against government spending for basic research it has paid for itself time and time again.

If you consider solar to the "ultimate option" you're closing your mind to other ideas.

People have made fortunes betting against conventional wisdom.

mambodog• 15 years ago

not a slavic devotion to a specific technology

I'm thinking you mean:

http://www.thefreedictionary.com/slavish

rather than:

http://en.wikipedia.org/wiki/Slavic_peoples

rmason3• 15 years ago

You are correct. That will teach me not to multitask;<)

roel_v7• 15 years ago

That is a false comparison, because you're comparing a 'positive evolution' (yield of PV increases) with a 'negative evolution' (amount of horse manure produced grows). What he's saying is that, even without radical breakthroughs, we will reach grid parity in a few years. Of course there may be a breakthrough in either PV or other tech, that will make it only better.

What he's saying is that we've reached the point where we can generate renewable electricity. Now we only need to triple the output so that we can have our cars drive on it too, and that industry can run on solar power.

nradov• 15 years ago

Beyond the power price issues there is some value in being able to partially power your residence when the grid is down. Many of the nicer homes in Florida now have fossil-fuel generators since everyone has seen how a hurricane can knock out power for weeks. And grid reliability is likely to decrease due to lack of infrastructure investment.

tryitnow• 15 years ago

If solar really does drop in price significantly and has a big impact, wouldn't that lessen demand for coal/natgas/etc? A drop in demand will lead to a drop in the price of those fuels everything else held equal.

Of course, maybe the declining supplies of fossil fuels will cause fossil fuel prices to rise. But what about advances that make the extraction and consumption of fossil fuels more efficient?

I'm just throwing these things out there because there's a lot of economic dynamics that could move targets like "grid parity" significantly.

prodigal_erik• 15 years ago

How can landlords make this an investment that pay off? http://sfbay.craigslist.org/search/apa?query=solar+panels... hardly finds any hits, so I take it "you'll have lower electric bills in this apartment" has not been found an effective way to attract renters.

ck2• 15 years ago

But the fact that 30 pounds of silicon, an amount that costs $700 to produce, is enough to generate a lifetime of household electricity baffled me.

Except per panel is at least $300 and you need a bunch of them.

I guess the idea is also to avoid battery storage and just feed the grid.

Price comparison for grid-tie http://www.sunelec.com/comparisons_of_grid_tie_systems_price...

orijing• 15 years ago

This is really interesting because very recently, a bunch of American solar companies joined together to sue Chinese solar companies for selling panels "below cost" (i.e. "dumping") [1].

I don't understand how that works. What is the cost they use? For industries with steep learning curves, the right strategy would be to use expected future cost as the basis for business decisions, rather than the trailing average (realized) cost, in order to build the market and more quickly progress on the learning curve.

If that's illegal (it's often used in instances I mentioned above), then I feel like progress in industries with steep learning curves will be slower, because companies will be more timid, causing the market to grow less quickly.

What is everyone's opinions here?

[1] http://www.ibtimes.com/articles/234291/20111019/solarworld-s...

danssig2• 15 years ago

Personally I wish selling below cost were illegal across the board. It's a destructive practice and allows people who have no stake in one kind of market kill that market.

Take the Amazon Fire, for example. They lose money on every unit sold but they don't care because they expect more sales in their real business: retail. How are companies who only make these devices (e.g. Apple) supposed to compete with that? What market are they supposed to use to makeup their losses. And how can they protect this other market from getting hit with the same thing?

icebraining2• 15 years ago

How are companies who only make these devices (e.g. Apple) supposed to compete with that?

Apple doesn't only make those devices: see iTunes and the App Store. Besides, one can argue that they do the same in their deal with AT&T (which cuts $100 from the iPad price).

But to answer your question, there is more to compete on than price; in fact, Apple knows that well, considering they've been selling Intel laptops with less bang per buck than other manufacturers, like HP and Dell, and still sells a lot.

mhb• 15 years ago

We should thank the Chinese for giving us free solar panels which will eventually help disentangle us from the geopolitical mess in which our fossil fuel dependency involves us. We will be able to devote the intellectual and financial resources formerly devoted to those pursuits to more beneficial endeavors.

mattmanser• 15 years ago

I'm more inclined to view it cynically, China have already said they want to be the world leader in alternative power sources, a move like this could be seen to deliberately destroying foreign competition, stopping any incentive for non-Chinese companies to invest in R&D leading to a Chinese monopoly on the technology.

At best China will collapse a-la Russia under its own evil government, at worst this will help prop them up for many years to come.

Scary thought.

I'm not thanking any nation involved in such wholescale thought control. Let's not forget it's an evil nation, they're liberty and freedom hating bastards. This seems to be a lost thought recently in the capitalist land rush that's been going on the last decade.

ww520• 15 years ago

This is fantastic. Haven't looked at the solar pv for couple years. Didn't realize they have dropped so much in price.

Does anyone know the current approximate total cost (labor + material) in Northern CA? It was like $8-$10/W last I looked couple years ago. Also how easy is a DIY approach in installation?

ph0rque• 15 years ago

I just got quoted $5.10/W in NC, can't imagine the CA costs are too different.

Havoc• 15 years ago

>As scale goes up, per-unit costs come down. This is known as a "learning curve"

Weird. Where I come from that is called economies of scale & learning curves are applicable only to the labour component.

roel_v7• 15 years ago

Anecdote != data, subsidies are bad, etc etc - but my parents' PV installation is paying off at an 11% ROI right now (Belgium, heavily subsidized), up from an estimated 8% at the time of installation (3 or so years ago) because of the high amounts of sunshine there have been there. Bring on the global warming. There are many people getting filthy rich on these installations (for example those who have large industrial buildings with roof space they don't use - they are getting 4-8% NET YIELD on as much money as they could borrow back in 2006-2007, which back then of course was easy as pie).

icebraining2• 15 years ago

"European solar radiation"? How much is that exactly? I'm pretty sure the radiation levels where I live (Portugal) are much higher than in Scandinavia.

jakeonthemove• 15 years ago

A fascinating idea is to use solar and wind power to power factories or mining/production sites that are in remote locations - often, that's one of the main limiting factors.

The main disadvantage of solar power is that it can't be used 24 hours a day, however besides the expensive batteries, solar power can be stored in other ways - for example, you can use every minute of idle time or free capacity to power compressors that pump air inside a few large tanks, and use that compressed air at night to power the generators.

feb• 15 years ago

In the article the author claims the price reductions came from technology improvements. But some say they are caused by the entry of the Chinese on the market with heavy subsidies and dumping practices (http://www.grist.org/solar-power/2011-10-19-are-we-in-a-sola...).

Solar PV rapidly becoming the cheapest option to generate electricity

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