Solar Wins

Solar power is becoming a viable, price competitive clean energy source for many applications.  And although we will continue to need large power plants fired by coal, natural gas or nuclear energy for many more years, significant amounts of electricity are starting to be generated using solar power.  And much more will be produced in the coming years. 

McKinsey has a good produced a overview of the two major solar technologies- photovoltaic and concentrated solar thermal - including their solar energy cost estimates out to 2020.  McKinsey is forecasting a 53% decline in solar generation costs over this period.

This is the power (pun somewhat intended) of technology and manufacturing at work.  Because solar panels and solar thermal units are manufactured, they benefit from learning curve and scale effects.  In other words, their costs tend to drop over time and with increased use.

Extracted energy sources, like coal and oil, benefit from learning curve effects.  But these benefits tend to be outweighed by higher marginal costs of supply.  For example, a giant oil field was recently discovered off the coast of Brazil.  But it is going to be very expensive to get that oil to market because of the deep water drilling required. 

The result is electricity generated using extractive energy sources tend to rise over time and with increased use. 

McKinsey includes a price forecast that has the cost of solar power dropping to the 4-6 cent range per KWH by 2020.  DOE's Energy Information Administration's 2020 forecast for the U.S. average electricity price is around 9 cents per KWH.  The cross over price point based on these forecasts is around 2012. 

This is before adding additional costs for greenhouse gas abatement to the extractive energy source costs.

Put simply, solar wins. 

And as a distributed, decentralized power source - so will the growing number of small businesses that design, build, install, monitor and maintain residential, commercial and industrial solar power sites. 

Comments

[RedHotFranchises]

There have been several inventions lately such as The Solar Panel from Human Hair invented by a Teenager, Imagine the Worldwide Potential for this to take effect. The Use Of Natural Resources has always been the intention of Nature and we will greatly benefit from it.
Solar definitely Wins!

[Sean]

Be careful - centralized power has been (and continues to be) a prime economic mover since the days of Edison. The decentralization of power generation, in fact, was a major cause for the slow growth of industry before the early 20th century.

[Steve King]

I don't dispute the importance of large, centralized power plants and believe they will play a key role in power generation for a long, long time.

But with the cost of solar falling, it will increasingly be used.

[solar energy]

I can imagine every household using solar power to produce electricity. Making centralized power plants might not be a good idea. I hope the government won't consider that.

[solar panel grants]

I am a bit skeptical about large centralized solar farms. Those tend to be just more expensive versions of coal plants and the households don't really feel the supposed to be cheaper electricity cost.