Can Solar Become Cost Competitive?

Vancouver, Canada - A study released by Clean Edge notes that "solar power is beginning to reach cost parity with conventional energy sources" in the US.  Several of the world’s biggest technology and manufacturing companies – including Intel Corp and IBM have made major moves into the burgeoning solar power sector. This may not be the dawning of the Age of Aquarius, but it could be the start of a trend as corporate giants look to capitalize on the one source of energy that’s always shining somewhere.

"As solar prices decline and the capital and fuel costs for coal, natural gas, and nuclear plants rise, the U.S. will reach a crossover point by around 2015," notes writers of the Utility Solar Assessment (USA) Study, published by Clean Edge.

The study, written by Pernick and Clean Edge contributing Editor Clint Wilder, is based on interviews with more than 30 solar, utility, financial, and policy experts and leverages proprietary Clean Edge data on solar PV market size, cost and pricing history and projections, and other key market factors.

Installed solar PV prices are projected to decline from an average $5.50-$7.00 peak watt (15-32 cents kWh) today to $3.02-$3.82 peak watt (8-18 cents kWh) in 2015 to $1.43-$1.82 peak watt (4-8 cents kWh) by 2025 according to the study.  The study says solar power can make 10% of U.S. power generation by 2025, or about 255,000 of installed solar generation. 

In order to reach that goal, Clean Edge suggests that the three key stakeholders in the solar industry (utilities, solar companies and the government) must take specific actions which include:

  • For utilities: Take advantage of the unique value of solar for peak generation and alleviating grid congestion; implement solar as part of the build-out of the smart grid; and adapt to new market realities with new business models.

  • For solar companies: Bring installed solar systems costs to $3 per peak watt or less by 2018; streamline installations; and make solar a truly plug-and-play technology.

  • For regulators and policy makers: Pass a long-term extension of investment and production tax credits for solar and other renewables; establish open standards for solar interconnection; and give utilities the ability to "rate-base" solar.

"One of the big takeaways from this report is that, in many ways, the future of solar is in the hands of utilities," said Ron Pernick, Clean Edge co-founder and managing director and USA Study coauthor. "Reaching 10 percent of our electricity from solar sources by 2025 will require the active participation of utilities along with the support and participation of regulators and solar technology companies."

In just the past year, a number of utilities and solar companies have announced aggressive programs to deploy large-scale solar power projects, including Southern California Edison’s plan to install 250 megawatts of distributed solar PV, Duke Energy’s stated goal of investing $100 million in rooftop solar, and Pacific Gas & Electric’s announcements to invest in thousands of megawatts of concentrating solar power in California’s deserts. While these players are still in the vanguard, a number of other utilities are looking to join them to help bring solar power to scale - and the study shows that solar could become "ubiquitous" as with earlier semiconductor-based revolutions.

Installed solar power – both photovoltaic and concentrated solar power – has jumped to 3,000 megawatts in 2008 from 600 MW in 2003, the study said. Even that higher number is less than a tenth of 1 percent of total U.S. power generation.

Arriving at 10% solar in the U.S. will still require $450 billion to $560 billion between now and 2025, an average of $26 billion to $33 billion per year.

To put the investment in perspective: Utilities spent an estimated $70 billion on new power plants and transmission and distribution systems in 2007 alone. However the proportion of US energy supplied by solar compared to the cost still remains large.

To make up for its high capital cost, proponents of solar power point to a number of advantages over conventional energy sources. Among them, the ability to deliver energy at or near the point of use, zero fuel costs, minimal maintenance requirements and zero carbon-based source emissions.

According to the US Department of Energy modern solar electric power-generation systems such as photovoltaics (or PV) are also "some of the most elegant and environmentally benign energy systems ever invented."

According to a report released by the US DOE in January of 2008 all PV technologies generate far less life-cycle air emissions per GWh than conventional fossil-fuel-based electricity generation technologies. At least 89% of air emissions associated with electricity generation could be prevented if electricity from photovoltaics displaces electricity from the grid.

"As capital and fuel costs have doubled or tripled for coal, natural gas, and nuclear power over the past few years, solar power costs are coming down," explains Alisa Gravitz, Co-op America executive director and USA Study project director. "For the first time in history, cost-competitive solar power is now within the planning horizon of every utility in the nation."

The report can be downloaded at and (Co-op America’s solar program Web site).

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