How Cheap Can Solar Get? Very Cheap Indeed

Ramez Naam writes in How Cheap Can Solar Get? Very Cheap Indeed “If current rates of improvement hold, solar will be incredibly cheap by the time it’s a substantial fraction of the world’s electricity supply.” He concludes: If solar electricity continues its current learning rate, by the time solar capacity triples to 600GW (by 2020 or 2021, as a rough estimate), we should see unsubsidized solar prices of roughly 4.5¢ / kWh for very sunny places (the US southwest, the Middle East, Australia, parts of India, parts of Latin America), ranging up to 6.5¢ / kWh for more moderately sunny areas (almost all of India, large swaths of the US and China, southern and central Europe, almost all of Latin America). And beyond that, by the time solar scale has doubled 4 more times, to the equivalent of 16% of today's electricity demand (and somewhat less of future demand), we should see solar at 3¢ per kWh in the sunniest areas, and 4.5¢ per kWh in moderately sunny areas. If this holds, solar will cost less than half what new coal or natural gas electricity cost, even without factoring in the cost of air pollution and carbon pollution emitted by fossil fuel power plants. As crazy as this projection sounds, it's not unique. IEA, in one of its scenarios, projects 4¢ per kWh solar by mid century. Fraunhofer ISE goes farther, predicting solar as cheap as 2 euro cents per kWh in the sunniest parts of Europe by 2050. Obviously, quite a bit can happen between now and then. But the meta-observation is this: Electricity cost is now coupled to the ever-decreasing price of technology. That is profoundly deflationary. It's profoundly disruptive to other electricity-generating technologies and businesses. And it's good news for both people and the planet.

Posted in: Wall Street Trading