The future of solar power depends in large part on its cost. Critics of renewable energy complain in large part that coal and other fossil fuels are much cheaper. In fact, some utilities even claim that they cannot, in good conscience, raise rates for their customers in order to use solar power because they have a duty to provide the least expensive energy.
I’m wondering…. where do considerations of the planet come into play? Isn’t that a cost that needs to be considered?
Fortunately, some experts are predicting that grid parity – that is, the point at which solar power is equivalent in monetary cost to coal-based electricity – is about a decade away, and less in some regions. In addition, the cost of solar power is defrayed, in part, by tax incentives and projected increased property values. In fact, the time to reach the “break even” point for solar panels has decreased recently:
In a few places worldwide, grid parity has already been achieved. In California, for example, commercial solar panel rooftop systems are close to 45 cents per kilowatt-hour (kWh), due in part to the policies that set the price of solar power at times when PV technologies work best (middle of the day and during summer). Italy, too, is poised to get to grid parity for residential PV solar panel systems within a couple of years.
However, world-wide, we may still have to wait until the cost of solar power has dropped substantially enough to be price-competitive with our cheap coal and gas sources.
You may be wondering, as I was, if there is anything we can do to speed up the future of solar power. In other words, how can the relative cost of PV technology be brought in line with the usual fossil fuel resources on which the world relies?
Perhaps we should take a look at the playbook of Greece. This high-subsidy nation enjoys heavy private investment in solar power, and those that do so are smiling all the way to the bank. In one blog post, the author notes that investors in Greece are making a healthy profit, as measured by the internal rate of return (IRR):
In fact, in subsidized markets, IRRs can reach well in excess of 10 percent, said Ted Sullivan, senior analyst at Lux Research, and lead author of the report. And that is “actively fueling [new solar] demand,” he added.
But, where solar subsidies are not offered, the industry is unable to get off the ground.
Personally, I believe the future of solar power is within our grasp. That being said, it is still very dependent on solar subsidies. As governments continue to invest towards a fossil-fuel-free tomorrow, major manufacturers are also making advancements to reduce costs and increase production.
Grid parity is expected to occur in 5-10 years. We need only be patient and diligent in advancing the ball when it comes to solar panel technology and encouraging people to continue investing – both public and private funds.