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Cost Of Solar Power Expected To Compete With Coal Soon, Analyst Says

solar panels

A cleantech Senior Research Analyst at Piper Jaffray & Co, Ahmar Zaman, has said that he believes solar power will reach grid parity at a retail level in some markets as early as next year.

These markets include Italy and Hawaii, where the price of electricity is fairly high, and there is a lot of sunshine.

Zaman explains that in 2007, the cost of residential solar power was around $8 to $10 a watt. In 2011, solar systems can be installed for $4 to $5 a watt. In places where the price of electricity is high and there is high solar radiance, the solar market is already approaching parity. Additionally, the price of solar panels has declined over the last few years.

The key point is that they think that markets with grid parity will emerge as early as this year or next year, and by 2015. This is a lot sooner than many people think. In Southern California, for peak energy demand at peak electricity prices, solar is already at grid parity.

Further, they think that by 2015, most markets in the world will be at grid parity unsubsidized. They believe that every year, solar will get more and more competitive in more and more markets around the world.

Zaman maintains that over the next few years, the price of solar will continue to decline, and subsidies will eventually be phased out. Solar will be able to stand on its own, unsubsidized. The growth in solar will be driven by demand in terms of the need to offset power prices, and the consensus on the need to address climate change around the world.

The need for rural electrification in regions such as India and Latin America will also help to drive demand. It was noted that the uptake of cell phone technology was also high in these emerging markets. Solar could follow a similar path. It’s expensive to install transmission lines out to rural areas, so solar will be looked at as a viable option.

Image CC licensed by Living Off Grid




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  • Anonymous

    Not convinced. All fine in sunny isolated places.

    Fossil fuels are a free kick in that they are pre-concentrated by nature. Just dig & burn.

    Most natural alternative energies are diffuse in nature, thus the big up front capital costs in collecting, concentrating and storing until time of use. The one exception is hydro power, in between solar and wind and fossil fuels. But the condition needed to produce it are limited to high relative even rain on geographies suited to dam buildings. That’s why it not a high growth area, good dam sites in OECD nations already have dams on them. See a pattern.

    Over three billion years and nature hasn’t been able to evolve anything better than photosynthesis. Think it’s high unlikely we will. Can see lots of tries that will be very expense, use rare exotic materials or be toxic.

    Go for it, gotta try.

  • http://www.the9billion.com jjprojects

    Well people are certainly trying, and in fact solar has been doubling in installed power about every 2 years for the past 20 years. If that continues, as computing power, mobile phone tech and the web have done, things could be looking pretty good in 15-20 years.
    Add to that efficiency improvements, and as you say, trying new materials and techniques. It’s possible. http://www.the9billion.com/2011/02/25/100-solar-energy-in-20-yrs-no-problem-says-futurist-ray-kurzweil/

    Also, just dig and burn? Aren’t you forgetting some of the problems? Oil is a finite resource and will start to run low and get more expensive. The environmental costs are not factored in. They probably will be as carbon prices start to be introduced. Plus, there’s the transport factor. We dig it, often transport it thousands of kilometers and then burn it. It’s going to get expensive to do that.

  • Anonymous

    Yer, oil is finite, so is coal, but that’s a lot further away. Oil is the most flexible and thus most valuable energy source we have, the value of all other energy sources are relative to its price. Peak oil will push oil prices up, but as is already happening, the move will be to coal.

    We’ve been 250 years without counting the environmental costs. Realistically that does look like changing some, remember this is Tragedy of the Commons and any solution is all in or nothing.

    When you say solar doubling I assume you mean photo voltaic (PV). That’s inflated due to subsidies. The Northern European figure are totally dodge due to that. Due to the poor solar conditions there, the pay back on PV is 50+ years (depending on exact location), and the life of PV is 25+ years. Me understanding is that energy wise you put more in at manufacturing etc, that you get out during there working life. More sense to put the PV in North Africa & run DC cable across the Med!

  • http://www.the9billion.com jjprojects

    Well sure, coal is not going to run out soon, but it could be phased out on purpose. There is that saying that the stone age did not end because we ran out of stones. I hope you are wrong about a move to coal. I admit that starting to use tar (oil) sands in Alberta and such like is an astonishingly irresponsible move, in terms of carbon emissions. The doubling of solar includes photovoltaic and solar thermal. I’ve just posted another post about solar in the US doubling in 2010, and it’s set to do so again in 2011, for instance. http://www.the9billion.com/201…In terms of the solar pay-back and subsidies, I think we have to remember that fossil fuels still have government subsidies on them, and that’s when fossil fuel companies are making huge profits! As solar becomes cheaper, there is a possibility that subsidies won’t be needed. Also, I think you are forgetting the exponential innovation curve that occurs with new technology. Look at computing power, mobile technology and the Internet. Solar is following a similar path, so over the next 20 years, it is likely it will become a lot more efficient, smaller and much less expensive.

  • Anonymous

    In para 3, you miss my point. Not talking about subsidies vs fossil fuels.

    Saying that is unsunny clines, the carbon emitted & energy used pre operations (manufacturing, transport, installation etc) for PV specifically may never be recovered in the life of the panel.

    Any one seen/got Odum audits of PV? (Odum goes deeper than most audit method, thus giving more reality results)

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  • Anonymous

    Still not convinced? Germany and Alaska get about the same in sunshine, yet Germany is able to export energy, because more than half of what they is from Solar. On exceptional days they even produce more from solar than they use.
    While some conservative will say “oh that didn’t work and they started to wind those green policies” they simply ignoring the political reality that Angela Merkel’s government is quite right wing, but that said she really likes the tight windows (less draft, less heat loss, efficient heating).
    The lower 48 have some of the sunniest places on earth. Clouds tend not to be a negative impact on production, more often they are a positive impact, because they absorb infrared, and scatter UV. Without the IR radiation, the panels stay cooler, and more efficient. The scattered UV means it is absorbed omnidirectional, so tracking the sun for peak conversion isn’t needed, and kind handy since many building codes don’t allow solar tracking on roof top solar anyway.
    Best of all its cheaper, pay back may be around 7 years, and the system should last 25-30 years. Some companies are offering $0 upfront, the installation cost is pay from savings for avoiding using grid power.

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