Solar power costs dropping, nearing competition

NEW YORK (Reuters) - Solar energy is fast closing the price gap with conventional U.S. power sources and is likely to drop to near even in cost in many regions in the next few years, industry sources said this week.

Price declines for the clean energy have been driven by the ramp up in production of solar cells and panels and advances in technology that have increased the cells' efficiency.

Under current laws that expire in 2008, installation of solar power systems are subsidized by a 30 percent investment tax credit that helps narrow the gap between the cost of 20 to 40 cents per kwh and typical U.S. retail electricity costs of about 10.5 cents per kwh.

Congress is debating a possible extension and expansion of current solar subsidies as part of a broader energy legislation package.

But much of solar's viability hinges on whether the systems can feed power directly into the grid systems used by utilities, Michael Ahern, CEO of solar module manufacturer First Solar Inc., told Reuters Wednesday at the Renewable Energy Finance Forum.

Currently, utilities can buy power from low-cost coal-fired plants for around 4 cents per kilowatt, and sell the power to households and business at about 12 cents per kwh, although prices can be much higher during peak usage hours, said Ahearn.

However, in a supply-constrained market such as California, Ahearn said, power prices ranged from 12 to 23 cents per kwh, making solar nearly competitive.

First Solar hopes to offer retail energy buyers competitive power prices of 8 to 11 cents per kwh as early as 2010, Ahearn said.

"If we can hit 8 to 10 cents, I think we're going to open some markets," he said.

With power prices climbing and the cost of solar power falling, the outlook for solar energy is bright, said Alf Bjorseth, CEO of Swedish company Scatec.

In some markets, solar energy is already a cost effective source of power, Bjorseth said, and that trend is set to expand, especially in larger markets.

New technologies such as thin film solar modules and the use of nanotechnology will further boost solar energy affordability, according to company executives at the conference.

Tempering that optimism, however, were several challenges to the industry, including a shortage of the silicon that is used to make solar modules, which has hampered industry growth, said Bjorseth.

The regulatory environment may also prove to be an obstacle to solar power, according to Ahearn.

Investing in new solar installations also remained risky because no clear regulatory framework existed to compare how renewables would fare economically over the long-term against more conventional sources, even with federal subsidies, Ahearn said.

Variable output and intermittent availability are the Achilles' Heel of these proposals. If we're thinking of any kind of large-scale system, like 200 miles on a side, you're probably going to have to have a similar-sized storage reservoir, and that just doubles the siting issues.

Pumped storage hydro has been proposed but most often it is shot down by environmentalist objections. Not a lot of people know it, but many technology historians trace the origins of the modern environmentalist movement to a fight over a proposed pumped storage reservoir, that being the Storm King Mountain project in the Hudson Valley. And the opposition was led by stinky, ratty, flea-bitten, pony-tailed wackos like you see today. The original "environmentalists" were extremely wealthy landowners along the Hudson River valley, who objected not so much to the idea of a reservoir as to the visual pollution the transmission lines would bring to their views of the picturesque Hudson Valley. Sounds familiar? Think Teddy Kennedy and the proposed Cape Wind project. So I don't have a lot of hope either for large-scale storage systems being built anytime soon. Its all coming down to NIMBYs and NOPEs and BANANAs.

Ask people today what Storm King Mountain was all about, and 9 out of 10 will say it was a nuclear plant. Little do they know that it is something related to that darling of the environmentalist movement, solar energy. Most solar energy advocates will disavow any knowledge of the issue, but that doesn't stop the NOPEs and NIMTOOs from opposing something like it.

While I am all in favor of alternative energy sources, most of them are far too sugarcoated.

Compare 1989 vs 2004 when the earliest & latest numbers are available.

In 1989 Wind, Solar and Geothermal combined made up 0.61% of our power generation

15 years later, with all the new plants and farms, Gazillion of dollars and tax breaks for subsidizes and research, in 2004 those numbers only increased to 0.79% of our power generation. And almost all of that "BIG" gain was made by wind.

We've been hearing about how cheaper and more efficient solar panels are just around the corner for 50 years now. And with out fail, solar (and these other alternative energies) has overpromised and underdelivered every single time.

Solar will never be viable, no matter what breakthrough comes down the pike you just can't get around those pesky Laws of Thermodynamics

I didn’t consider this a ‘pie in the sky’ article. It’s simply informing folks that more research is being done by the day to make this more feasible for more folks down the line. The more arrays that are sold, the more money for the companies to do research, and as with all new technology, the ones in the first wave always pay more, while after the technology has been in use and the kinks are worked out, the next wave pays a little less, and so on.

The numbers I have seen indicate that if all of the "alternative" technologies were developed to their maximum, economically feasible potential, we'd be looking at meeting something like 20-30% of our total projected demand. We're spending decades of time and billions in research and tens of billions in tax breaks and direct subsidies on something that might meet at most a fifth or fourth of our projected needs. The larger problem remains unsolved: where do we go for the other 70-80% of our needs?

No matter how you slice it, it's going to come down to two things: find a way to use coal in an environmentally acceptable manner, or go with nuclear, or do both. With coal you can develop synfuels and gasification and perhaps address some of the transport sector needs. Nuclear can do it if we go with electric substitution for ground transport and some kind of energy carrier, hydrogen, boron, whatever. Nuclear will have to go with commercial reprocessing and actinide recycle to address the fuel supply and waste storage issues. Maybe something like the closed fuel cycle IFR concept can also make a difference.

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