The Real Costs of Photovoltaics: We Are NOT at Grid Parity—Not Even Close

[Brian Howell]

MIT Technology Review has an excellent article up on Solar City’s new photovoltaic (PV) manufacturing plant that it is constructing in Buffalo, New York. It also appraises the economics of the solar power industry, which relies heavily on tax breaks and other financial incentives to offset the true costs of solar power generation, and the risks to Solar City, if and when such subsidies disappear. Notably, consumer and commercial federal tax credits for solar power will significantly diminish or expire at the end of 2016. 

Per the article, a few months ago Deutsche Bank published a report stating that PV arrays have attained grid parity in at least fourteen U.S. states: that the cost per watt has dropped to a price point at which solar power is price competitive with other forms of electrical power generation (notably natural gas and coal-fired power plants). According to MIT, that's basically true: one watt of solar power now costs $0.65, down from $4.00 in 2008. But what DB overlooked is what are called Balance of System costs. These include inverters, storage batteries (Hi, Matt!), and other infrastructure necessary to utilize the power coming from solar cells. Those costs haven't dropped nearly as much and so the levelized costs—which include amortizing infrastructure costs over the expected life of a PV array—yield a much higher actual price per kilowatt hour for solar than for commercial power generation. A modern natural gas power plant can generate a KWH for $0.066. By comparison, a solar KWH in Massachusetts runs about $0.287. Even in sun-dreched Southern California, where Matt Lives, a solar KWH will run about $0.192, in levelized costs.

The article also states that we will need 12.5 terawatts of PV power by 2050 if we are to prevent the most dire effects of climate change. 

http://www.technologyreview.com/review/540226/paying-for-solar-power/

https://www.db.com/cr/en/concrete-deutsche-bank-report-solar-grid-parity-in-a-low-oil-price-era.htm

[Craig Good]

I find this rather unsurprising. Isn’t the real comparison here between centralized and distributed power generation? I’d never expect distributed to win that horse race. Economy of scale is totally a thing.

It probably will, overall, cost me more to install solar. But if I’m running a vehicle off of it that isn’t burning any gasoline it tilts things slightly back in my favor.

And while it’s still expensive, it’s impressive how much cheaper solar has gotten.

On Aug 19, 2015, at 08:51 AM, Brian Howell <bdho...@gmail.com> wrote:

> A modern natural gas power plant can generate a KWH for $0.066. By comparison, a solar KWH in Massachusetts runs about $0.287. Even in sun-dreched Southern California, where Matt Lives, a solar KWH will run about $0.192, in levelized costs.

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--Craig WWJGD?
clg...@me.com http://www.craig-good.com

"If a man does not keep pace with his companions, perhaps it is
because he hears a different drummer. Let him step to the music
which he hears, however measured or far away."
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[David Fetter]

On Wed, Aug 19, 2015 at 08:51:48AM -0700, Brian David Howell wrote:
> *MIT Technology Review* has an excellent article up on Solar City’s new

> photovoltaic (PV) manufacturing plant that it is constructing in Buffalo,
> New York. It also appraises the economics of the solar power industry,
> which relies heavily on tax breaks and other financial incentives to offset
> the true costs of solar power generation, and the risks to Solar City, if
> and when such subsidies disappear. Notably, consumer and commercial federal
> tax credits for solar power will significantly diminish or expire at the
> end of 2016.
>
> Per the article, a few months ago Deutsche Bank published a report stating
> that PV arrays have attained grid parity in at least fourteen U.S. states:
> that the cost per watt has dropped to a price point at which solar power is
> price competitive with other forms of electrical power generation (notably
> natural gas and coal-fired power plants). According to MIT, that's
> basically true: one watt of solar power now costs $0.65, down from $4.00 in
> 2008. But what DB overlooked is what are called Balance of System costs.
> These include inverters, storage batteries (Hi, Matt!

> <https://groups.google.com/d/msg/ipse-dixit/_RCs8b8jVeE/IyUGOMjPCAAJ>), and

> other infrastructure necessary to utilize the power coming from solar
> cells. Those costs haven't dropped nearly as much and so the levelized
> costs—which include amortizing infrastructure costs over the expected life
> of a PV array—yield a much higher actual price per kilowatt hour for solar
> than for commercial power generation.

> A modern natural gas power plant can generate a KWH for $0.066.

> By comparison, a solar KWH in Massachusetts runs about $0.287. Even
> in sun-dreched Southern California, where Matt Lives, a solar KWH
> will run about $0.192, in levelized costs.

In doing so, said plant produces about 2 kg of CO2, a cost the owners
of the plant externalize entirely. At a fairly sane internalization
of $0.15/kg, that kWh now costs $0.366.

I have conflicting figures as to the CO2 budget for a kWh of solar
power, but none of them get into the gram range.

> The article also states that we will need 12.5 terawatts of PV power by
> 2050 if we are to prevent the most dire effects of climate change.
>
> http://www.technologyreview.com/review/540226/paying-for-solar-power/

It's not 100% clear to me that in the solar regime, PV is the best way
to go, especially at power plant scale. While it's less sexy, solar
thermal is cheaper to do in power plants.

Cheers,
David.
--
David Fetter <da...@fetter.org> http://fetter.org/
Phone: +1 415 235 3778 AIM: dfetter666 Yahoo!: dfetter
Skype: davidfetter XMPP: david....@gmail.com

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[Matt Fish]

In fact, it looks like using solar thermal and concentrated solar power with mirrors and lenses starts to make fossil fuels look expensive. To take just one example, utility-scale concentrated solar power plants are one of the most land-efficient resources available. 

A quote (below) from this article: 
http://www.renewableenergyworld.com/articles/2012/09/sorry-critics-solar-is-not-a-rip-off.html

"The federal government has dedicated nearly 2,000 times more acreage to oil and gas leases than to solar development. In 2010 the Bureau of Land Management approved nine large-scale solar projects, with a total generating capacity of 3,682 megawatts, representing approximately 40,000 acres. In contrast, in 2010, the Bureau of Land Management processed more than 5,200 applications gas and oil leases, and issued 1,308 leases, for a total of 3.2 million acres. Currently, 38.2 million acres of onshore public lands and an additional 36.9 million acres of offshore exploration in the Gulf of Mexico are under lease for oil and gas development, exploration and production."

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[Craig Good]

This bit of extrapolation, presented without implied agreement, just came over my transom.

http://rameznaam.com/2015/08/10/how-cheap-can-solar-get-very-cheap-indeed/