According to two top solar executives -- Tom Dinwoodie, chief technology officer and founder of SunPower and Dan Shugar, former president of SunPower and current CEO of Solaria -- "ferocious cost reductions" are accelerating that crossover in a variety of markets today.Their goal: to explain that solar PV is no longer a fringe, cost-prohibitive technology -- but, rather, a near-commodity that is quickly becoming competitive with new nuclear, new natural gas, and, soon, new coal.These slides are a must-see for anyone interested in solar, or in the business of energy generally. While I think some of the predictions and comparisons between technologies aren't telling the full picture, the underlying data is very compelling: We are starting to realize grid parity in solar -- all with technologies available today.Read moreLet's take a look.
Notice in the first chart how steadily manufacturing costs have come down, from $60 a watt in the mid-1970's to $1.50 today. People often point to a "Moore's Law" in solar -- meaning that for every cumulative doubling of manufacturing capacity, costs fall 20 percent. In solar PV manufacturing, costs have fallen about 18 percent for every doubling of production. "It holds up very closely," says Solaria's Shugar.
The "Moore's Law" analogy doesn't necessarily work on the installation side, as you have all kinds of variables in permitting, financing, and hardware costs. But with incredible advances in web-based tools to make sales and permitting easier; new sophisticated racking, wiring, and inverter technologies to make installation faster and cheaper; and all kinds of innovative businesses providing point-of-sale financing (think auto sales), costs on the installation side have fallen steadily as well. The Rocky Mountain Institute projects that these costs [PDF] will fall by 50 percent in the next five years. (Note: This chart is from RMI, not from the Dinwoodie/Shugar presentation.)
What has driven these cost reductions? A staggering ramp-up in installations around the world that have driven an even greater increase in solar manufacturing. (By the end of this year, GTM Research predicts we'll have 50 gigawatts of module global production capacity.)As SunPower's Dinwoodie puts it:
That 17 gigawatts installed in 2010 is the equivalent of 17 nuclear power plants -- manufactured, shipped, and installed in one year. It can take decades just to install a nuclear plant. Think about that. I heard Bill Gates recently call solar "cute." Well, that's 17 gigawatts of "cute" adding up at an astonishing pace.
He has an excellent rhetorical point, which highlights the brilliance of solar: This modular technology can be produced and installed at a pace far faster than most energy technologies. And businesses are getting amazingly efficient at doing so.
However, this comparison neglects the "value" of energy. Nuclear is a baseload resource; solar PV is more of a "peaking" resource. To compare 17 gigawatts of global solar PV development to 17 gigawatts of nuclear power plants ignores the fact that nuclear produces far more electricity than an equivalent solar PV plant.
With that said, solar brings a different kind of value to the grid. Not only can it be quickly deployed on existing infrastructure (warehouses, commercial buildings, residences) at rates that are orders of magnitude faster than nuclear, it offsets the most expensive peaking power plants -- providing immediate economic value.
Here's an amazing statistic told by Shugar: If only 500 megawatts of solar PV had been deployed in the northeast U.S. to help alleviate demand for electricity, the August 2003 U.S.-Canadian blackout wouldn't have happened. That blackout was the second largest in the world, causing between $7 and $10 billion in economic damage.
"We are considerably lower than natural gas peaker plants," says Dinwoodie. "We're also coming in lower than new nuclear and becoming lower than new coal. Gigawatts of these plants are being developed in months -- not years or decades."Here's their comparison between solar PV, natural gas peakers, nuclear, and coal. The figures come from Lazzard, an international financial services firm that tracks energy data, and the Department of Energy.
It would appear that solar PV is also cheaper than new nuclear:
This year, the U.S. industry may install 2 gigawatts of solar. The last nuclear power plant to come online in the U.S., Watts Bar 1, has a capacity of 1.1 gigawatts -- but that took 23 years to complete, not two years.
When looking at the time and cost of construction of new nuclear -- as well as insurability issues -- solar PV (in sunny areas) is already competitive with those plants. Again, I believe there is a big difference in the "value" of electricity from nuclear and solar PV given that they play such opposite roles; but these figures do tell an interesting story. (These figures were put together before the Fukushima accident.)
And what about coal -- supposedly our cheapest form of energy?
Dinwoodie and Shugar argue that solar PV is becoming competitive against that technology too:
