Solar Prices Competitive By 2015

June 18, 2008

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The Utility Solar Assessment (USA) Study (PDF), released by Clean Edge, finds that, “for the first time, solar power is beginning to reach cost parity with conventional energy sources.”

Analyzing the declining cost of solar energy and the dramatic increase of its use, coupled with the rising costs and declining use of coal, natural gas, and nuclear power, the study says the U.S. will reach a crossover point by around 2015.

In light of the growth of solar power — 40 percent per year since the beginning of this decade — Clean Edge offers advice to utilities, solar companies and regulators and policy makers.

Take advantage of the value of solar for peak generation; implement solar as part of the build-out of the smart grid; and adapt to new market realities with new business models, Clean Edge advises utilities.

For solar companies, Clean Edge says: Bring installed solar systems costs to $3 per peak watt or less by 2018; streamline installations; and make solar a truly plug-and-play technology.

Of course, the industry needs some help. Clean Edge advises regulators and policy makers to pass a long-term extension of investment and production tax credits for solar and other renewables; establish open standards for solar interconnection; and give utilities the ability to “rate-base” solar.

But on Tuesday, the U.S. Senate on Tuesday blocked debate of The Energy Independence and Tax Relief Act of 2008, a bill that would offer about $17.7 billion in tax incentives for consumers to build renewable energy sources like windmills and solar arrays, Reuters reports.

The Clean Edge study says the investment required to arrive at 10-percent solar by 2025 isn’t small — perhaps as much as $560 billion between now and 2025, or an average of $26 billion to $33 billion per year — but compares that to an estimated investment by utilities of $70 billion on conventional power in 2007 alone.

According to the report:

Solar can offer a price hedge against volatile and increasing costs for fossil fuel resources like coal and natural gas.
Once installed, solar provides stable fixed prices to utilities and users.
Solar is becoming a cost-effective peak generation resource.
Within a decade, solar power will be cost-competitive in most regions of the U.S. on a kwh basis.
Compared to coal, nuclear, and gas-fired power plants, solar has no fuel costs, low maintenance costs, and will provide credits, rather than costs, in a carbon-regulated world.
Solar is a widely available resource, suited to most locales around the nation.
Solar can ease congestion in regions where energy demands have stressed the grid.

The report is not surprising and is, at the same time, music to the ears of the solar industry and the environment. Solar companies are becoming financial intermediaries, leading companies to install solar power that wouldn’t otherwise be able to afford it.

Environmental Leader reported recently that venture capital investment in the solar industry has gone from a few deals in 2004 to potentially reach $1B in 2007.

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