The price of solar power just fell 50% in 16 months | Hacker News Reader

The price of solar power just fell 50% in 16 months

electrek.co

756 pointslxm435 comments

The aggressiveness of the price drops on solar is pretty amazing. I just lost one of the inverters on my grid-tie system after it had run trouble free for 13 years. So we're looking at the first "major" repair to the system I installed in 2003. And in 2003 my 5.2kW of panels on my roof cost $38,000 before subsidies and $19,000 after. 28 panels, two 2.5kW inverters, net about 4.2kW of generation.

I priced out replacing all the panels (now I can do in 10 panels what used to take 28) and the inverters with a single 5kW inverter, $7,000. My price, no subsidies. That is over 80% reduction in cost, over 13 years, of the list price of $40K.

And that is why it is a huge problem for the power companies, it makes less sense now to not have panels on your roof.

How long until you start seeing a return on investment? Right now my electricity bill for my home is ~100 a month in Texas. I would need to keep the same panels without maintenance fees for 33.33 years by your price point of 40k

You can also sell electricity generated by your panels back to the grid.

Effectiveness of this varies by state or region. For instance, when I was in the Bay Area 10 years ago and looked into this, PG&E would let your electricity bill get to 0, but wouldn't let you go into rebate territory. They just wouldn't pay you for the additional electricity generated. I think other states/utilities have different options.

Most solar quotes take this into consideration, and quote you for enough solar to get into the minimum bill for your region (most utilities have a few hundred Kwh you can use per month at an obscenely low rate, and then it ramps up from there--solar is quoted so that you'll always stay within that cheapest range.)

For my current house in Austin, I'm still interested in solar, but it was both more cost-effective and had a shorter payback time to re-insulate to R36 in the attic and redo our horrible system (which had no ducts at all--agh, stupid 1956 house) than it was to do solar at the time.

Sadly, not in very many places. In most US states, for example, utilities have lobbied to get laws that don't allow residential customers to sell power back to them, at most net-metering agreements will allow you to get credits from any excess power your panels generate (which is how my utility handles mine - unfortunately, since I generate more than I use, I can't actually make use of those credits fully, and I'm giving away some power to the grid).

Y but now it's 7K and not 40K.

Payback of 6 years with the new cost, even for your low electric bill.

Excellent example of why solar panels (in the right locations) and LEDs are a better investment than the S&P500 right now. You spend dollars now to eliminate the need for future dollars.

While that is true, keep in mind that future dollars are less expensive than present dollars.

But it stands to reason that the prices of energy will rise faster than the rates of inflation, so it would still be a good investment.

If everybody buys solar, electricity prices will only rise faster than inflation in periods without much sun.

It might even be profitable to play a 'buy when it is free or cheaper, use when it costs money' strategy. You can get there by buying large batteries, charging them from your neighbor's solar panels when there is lots and lots of sun (they may even sell at prices below zero), and discharging them, selling to you neighbors, when there is little sun and wind.

I'm already investigating buying 50+ MW at a time of Tesla Powerpacks in certain markets exactly for this purpose, as an independent generator. Buy power when people are paying you to take it, releasing it back to the grid at the most expensive times.

And presumably a lower bill implies lower energy usage, so he'd need fewer panels to cover it.

Unlikely. Solar Panels don't replace all of your electricity costs. Naturally, you'll still run your refrigerator at night, right?

And during the day, when you have peak-solar energy, you'll be at work and won't be taking advantage of it. You'll recoup some of the costs through net-metering, but you usually buy back at wholesale prices and not at retail prices.

Finally, I'd expect utility companies to change their pricing scheme in the near future to account for solar. They service your electrical wires for example, and you'll likely have to pay a certain amount of money for that. So while you're not buying "power" (or at least, as much power) as before, you'll still have the service cost of being hooked up to the grid.

You need to consider the economics of "grid tie" you generate excess power into the grid and "buy it back" when you aren't generating in excess. So if you generate as much power as your going to use for the entire day from your panels, you pay nothing for that day. Even though you are drawing power at night.

In the Bay Area, there are other things that screw up the numbers but the program "trues up" once a year (rather than monthly) so some months (usually late spring through early fall) I'm generating more power than I use for the month, and fall/winter I consume more power than I generate in a month. The target is to hit it at exactly 0 which was easier to do when PG&E would exchange kilowatts for kilowatts but it is harder now with their system of charging extra kilowatts over baseline. Its screwed up and not fair but I get that they are hurting, if I could get Elon to sell me the battery pack out of a Model S and the inverter infrastructure to go with it, I could leave the grid entirely and that would be easier.

That's the idea with the Power Wall, https://www.teslamotors.com/powerwall Unless that's what you're pointing out

> You need to consider the economics of "grid tie" you generate excess power into the grid and "buy it back" when you aren't generating in excess.

Depends on the state.

Sometimes, you buy at retail prices and sell at wholesale prices. Which honestly, is far more fair. You're basically using the utility's batteries / energy storage at no charge right now (if you're in a state with pure net metering laws)

And yes, purchasing a PowerWall is more "fair". Instead of relying on the service and tax-incentives to give you a free battery pack, its definitely more fair if you got your own.

"Fair" in the context of a heavily regulated utility should have some relation to social benefit.

It's not fair for utilities to force costs onto consumers just because of a differential of political influence. It's not fair that solar reduces grid load at their peaks and saves them money on building out grid capacity and expensive and inefficient CO2 producing gas peaker plants and that benefit is not returned to the provider of that service.

Overall the many benefits of rooftop solar can be calculated and a value assigned. Most seem to come out at net or above, so talk of average wholesale prices is misdirection.

Consumers should pay a fair price for the service.

If consumers are using the utility's batteries and the utility's network, then the consumer should pay for the use of those services.

Peaker-plants can have a very simple solution: carbon taxes. Simple enough, and I support this measure to handle the externality.

Rooftop solar currently is probably a net benefit as long as the storage issue isn't a problem. (IE: the rest of the neighborhood doesn't have solar). But once solar adoption is widespread, someone needs to solve the storage issue (or "energy waste", if there is no more storage)

I'm glad you support a carbon price, because that's another great example of where "fair" becomes a political discussion.

I could say that if a coal producer wants to dump sulphur, radiation, C02 etc. into the air then it's "fair" that they recompense the people who live in the countries they pollute and the people they help to kill. Why should those who don't do this (people who generate their own electricity or pay to have non-coal energy) have to shoulder these costs?

Simple argument right? But no, it's a decades long political fight with no end in sight, because some groups have dispersed interests, while other groups have very direct incentives.

The same is true here, lots more rooftop solar would be of small benefit to most people. But it directly threatens some concentrated interests. And they will happily tell you that solar will destroy the grid, or net-metering isn't fair etc. etc. Not because it's true, but because it's in their narrow and short term interests to lie.

The difference is that I also think that net-metering is an unfair deal to utility companies. Again, someone needs to build the energy storage mechanism. You can't legislate away reality.

Chuck's sibling reply is spot on, but something else you must realize is that both renewables and energy storage are only going to get cheaper.

This means if utilities attempt to squeeze people with solar on their roof, they will simply move to batteries eventually. This already makes sense, today, in Hawaii (where the local utility was stalling on additional grid tie capacity, and with their per kwh rates so high, is was cheaper to go off grid). The more people who move off grid, the less people the utility can spread its costs across, increasing the rates for those remaining (which then rapidly incentives those people to move off grid).

This is called "the utility death spiral". Its a very real possible outcome, and utilities are aware of it. [+]

[+] http://www.greentechmedia.com/articles/read/this-is-what-the...

Indeed.

But what's to stop utilities from purchasing or creating cheaper large-scale projects?

I know you've seen my previous comments on Reddit with regards to Redox Flow batteries, CAES, and Pumped Hydro storage technologies. Utilities simply have access to battery-technology that the common people do NOT have access to. Some energy storage technologies only make sense in larger-scale 50MW applications or more.

If utilities serve a cooperative role in energy service, they will switch to the most cost-effective technology BEFORE the typical homeowner can switch.

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Basically, solar pricing is moving FASTER than rooftop solar. Rooftop solar will always require insurance and roof-workers, while solar utility companies can just buy out a field in the middle of no where and install solar on the ground.

Cheaper and safer for utilities to work with. And then everyone in the town benefits, instead of just a few rich people who can afford panels (and the insurance of the rooftop workers)

At some point the price for the panels will drop below the price (and losses) of the transmission lines to transmit the energy from the large-scale project to your house. This happened long ago if you live in certain parts of the Rocky Mountains, and it will happen in areas of progressively greater population density.

Rooftop solar only needs roof-workers and their insurance until you have a cherry-picker-style robot arm to stick the panels up there with.

Utilities have a lot of capital tied in their existing fossil fuel plants, and their economics are probably tied into running these at capacity for their remaining lives.

So from their perspective it makes sense to lobby politicians to stall residential solar as long as possible, the environment be damned.

Last time I checked, it was the motivation of utility companies to make money.

http://www.exeloncorp.com/companies/exelon-generation/solar/...

Look man, you may not notice it. But the big utility companies out there are investing heavily into solar.

> And during the day, when you have peak-solar energy, you'll be at work and won't be taking advantage of it.

I'm in Central Texas and I have two dogs at home. Even if I'm not there, I still leave the air condition going so they are comfortable. The last time I checked, my A/C system was the biggest power hog and so my electricity consumption aligns very closely with when the sun is shining.

Biggest power hog? Yes.

But not the only thing. My point is that its way too idealistic to assume that 100% of the costs will be covered.

I mean, yes, the laws as written seem to encourage a 1-to-1 transmission of energy. "Net Metering" is a law that subsidizes decentralized solar energy.

But in the future, when the subsidies run out and the laws are written to be FAIR (instead of written to encourage solar, as they are right now), you will not be allowed to purchase electricity and sell electricity back at the same prices.

All markets have a bid-ask spread. Wholesale prices are always going to be cheaper than retail prices.

I'm not sure what you mean by 100% of the costs will be covered. All I know is that I can reduce the amount of electricity that I buy during the day when I consume the most. The savings are greater than the cost so it's pretty much a no-brainer for me at this point. If I finance, I can pretty pay for the system with the money that I'm no longer using to buy electricity.

> when the subsidies run out

Why stop subsidizing solar? Do you think all energy subsidies are going away, or just solar?

https://en.wikipedia.org/wiki/Energy_subsidies#Allocation_of...

I think that net-metering is going to go away once solar adoption reaches a certain critical mass. You can't keep giving away free batteries to consumers, someone eventually will need to pay for those batteries.

Other solar subsidies may remain a bit longer. But net-metering is probably the biggest once.

> I'm not sure what you mean by 100% of the costs will be covered. All I know is that I can reduce the amount of electricity that I buy during the day when I consume the most. The savings are greater than the cost so it's pretty much a no-brainer for me at this point. If I finance, I can pretty pay for the system with the money that I'm no longer using to buy electricity.

SunEdison's model has been proven to be incompetent. SolarCity's "MyPower" loans have been scuttled. That's WITH the current large number of pro-solar subsidies that the US Government is paying for.

I think that it's a "no brainer" to take advantage of SolarCity's deals as a consumer. But in the long-term, it looks like their finances are unsustainable.

Personally speaking, I'm more concerned about a long-term reliable model that manages to get the energy to the most number of people. Utility scale solar seems to be the best solution, although its a bit boring.

I'm not sure that the net metering argument applies to places like central Texas. People consume the most power when the sun is shining so solar, even without net metering, makes sense. Of course other regions are different.

> Utility scale solar seems to be the best solution

I don't think it makes sense to talk about a best solution. Large scale solar will contribute along with nuclear, coal, natural gas, wind, etc...

Unless it's dorm-fridge-sized, you can definitely run your refrigerator only during the day, generating ice to cool it during the night. Building HVAC systems often work this way, running the chiller to generate ice during the night (when electricity prices are low or even negative) and running the resulting chilled water through heat-exchanger coils during the day. And superinsulated fridges like Sunfrost models can stay cool during the night even without such extra thermal reservoirs.

A thing I haven't seen, but which ought to be practical, is a solar thermal fridge — for example, using the ammonia-absorption cycle that propane-powered fridges use, but heated with sunlight instead of flames. PV panels are typically 16% efficient, but it's easy for solar thermal collectors to reach 50% efficient, and they're also about five times cheaper per unit area (still). So you'd think it would make sense to power the fridge directly from sunlight.

As an EMH guy, I'd like to think that if an Einstein–Szilard cooler was more economical than grid power for A/C and/or food refrigeration that there'd already be systems for sale.

There are absorption refrigerators for sale for food refrigeration — I had one in my Volkswagen — but I don't think they use the Einstein-Szilard design, but a simpler one. Here's one: http://www.amazon.com/Norcold-Inc-Refrigerators-N841-Refrige...

If you have space and money, you can create huge "gravity lamp" to store energy: lift up something massive using solar energy and electric motor, then it will slowly generate electricity at night using same motor as generator.

Or you can use "molecular spring", which is very compact, for same purpose.

How close are we to actually manufacturing molecular springs? My understanding is our materials science and engineering is not up for making macroscopic molecular springs yet, and what I can Google up seems to indicate we nowhere near macroscopic scale springs.

Make container of highly porous material then fill it with a fluid which will avoid that material surface at molecular level. AFAIK, it is invented years ago.

Can you post a link to that please? When I search around starting with the Wikipedia [1] entry, I don't find a description of what you are describing.

[1] https://en.wikipedia.org/wiki/Molecular_spring

http://www.google.com/patents/US7767301 http://dergipark.ulakbim.gov.tr/eoguijt/article/view/1034000...

> you'll be at work and won't be taking advantage of it.

Most people don't work in the dark

I've been trying to do this calculation myself. One factor I hadn't initially put in was the fact that I didn't need to think about a backup generator for our (east coast) storms.

You might—I do. Your inverter won't power the house when the grid supply is down. Why? Well, because if the grid supply's down, it's probably because there's a line down somewhere. Therefore there's a lineman trying to pick that line up somewhere. He's going to be handling both ends of a broken, downed line. The generator-side line is tagged out, that's safe. The house-side line? Well, that's up to you—and so your equipment will deactivate to avoid creating a safety hazard for grid maintenance staff.

An auxiliary grid independent outlet is apparently becoming a feature on newer inverters:

http://www.sma-america.com/newsroom/current-news/news-detail...

A generator probably beats a lot of battery systems (which along with the right inverter and a transfer switch is another way to use the solar for backup power).

Well one issue with grid-tied systems is that when the grid is offline they provide no power (they explicitly don't want to back feed into the power lines and kill some lineman who things power is off). So one of the certification issues is to make sure that your inverters recognize that state and shut down.

But a side benefit of putting in the system was we did a lot of electrical panel work, and as as result put 8 circuits on to a transfer switch (the incremental cost was the transfer switch and the electrictian's time wasn't materially affected.) So when the power does go out we can fire up a generator and switch over to gen power easily.

33.3333 * 7 / 40 = 5.83 years

I keep a close look at the economic of rooftop pricing in TX - it's still not profitable switching but getting close.

Cons: - Retail cost of electricity is already v low in most of TX (Houston, Dallas) - so it's hard to compete. - not much competition in the solar rooftop installation space (due to first point above) - No net metering policies in Houston, Dallas.

Pros - High solar yield

Keep in mind that the 30% tax credit will eventually taper off. It might behoove you to wait now, but not forever.

What is this 30% tax credit you speak of?

http://energy.gov/savings/residential-renewable-energy-tax-c...

ROI can only be one factor. The other is that you are suddenly using clean energy. Doesn't this make you feel better?

The typical American median household income is $51k.

Spending $40,000 of that on "clean energy" so that they can "feel better" is well outside of the typical person's price range. Even $7000 would be cost-prohibitive, especially if they're paying or saving up for their kids.

A cold can of beer also makes you feel better. Its a hell of a lot cheaper too. The answer for the typical American is to wait for utility-scale to build Solar out for them.

When the city as a whole notices that solar is cheaper than running peaker plants or whatever, then the city / municipality can purchase an entire field of solar (AND the energy storage needed to make it useful) and give it out for the whole town.

And in the mean time, you can drink your beer on the porch while you wait for progress to be made.

US$40K was the cost when Chuck did it in 2003. Now we're talking about US$7000 over 25 years, which is US$23 a month. US$23 a month is not "well outside of the typical person's price range" in the US.

If you want to "save up for your kids", the way to do it is to invest your money in the investments that have the highest ROI, as long as you have enough liquidity to weather emergencies. Pay off your 23% credit card before your 17% credit card, pay off your 17% credit card before you start putting up solar panels that will have a 16% internal rate of return, and put up the solar panels before you buy the cold can of beer with its 0% ROI.

Twenty years from now, you'll be drinking your beer on the porch and sending your kids to college, while your typical American loser neighbors are whining about their credit card and electric bills.

> US$40K was the cost when Chuck did it in 2003. Now we're talking about US$7000 over 25 years, which is US$23 a month.

Chuck is replacing a $2000 inverter in just 10 years. If your emergencies include "fixing the damn solar panels that you bought", that's your own damn fault.

In any case, when middle-class Americans start buying solar en masse, I'll admit I'm wrong. But for now, I'm going to bet you that this is a luxury that is not cost-effective for the typical middle-class American.

It ain't like a Washing Machine, Refrigerator or Water Heater. I'll tell you that much.

It ain't like a washing machine in 2016, which everyone already has one of. It ai very much like a washing machine in 1916, when not many people had one yet, in that the year-over-year growth rate in installed solar panels is at about 26% (http://www.economist.com/news/business/21696941-solar-power-...).

An inverter that cost $2000 ten years ago now costs $400. (Amazon has a Bestek 2000W inverter for US$140 right now; three of these can supply more than what my house is wired for.) Even if you did have to buy a new $2000 inverter every 10 years, that's US$17 a month.

It's true that financing the up-front investment is a difficulty, and that's why Solar City is doing such great business. But as the component cost drops, accelerating both the IRR and the up-front investment size, that's less and less of a problem.

If you do want to bet on it, I imagine you can buy stock or long-expiry call options in coal-mining companies (BTU is in penny-stock territory right now because they filed for bankruptcy a couple weeks ago, and ACIIQ is too because they filed for bankruptcy in January), or puts on SCTY and Enel Green Power. This is a terrible idea and will lose you money, and you should not do it.

Because you refuse to calculate, you are doomed to talk nonsense.

> It's true that financing the up-front investment is a difficulty, and that's why Solar City is doing such great business

On the contrary. SolarCity hasn't made a profit and their stock has tanked. It seems like solving the up-front cost issue is difficult.

Widespread deployment of Utility-scale Solar will harm SolarCity and their customers (who have entered into long-term purchase agreements). If Widespread Solar LOWERS prices in the long term, then SolarCity dies.

Good for the world of course, but SolarCity's bets are on the wrong side of progress IMO.

The up-front financing business is hard.

> In any case, when middle-class Americans start buying solar en masse, I'll admit I'm wrong.

Promise? Because that day will be here sooner than you think.

http://www.greentechmedia.com/articles/read/The-U.S.-Solar-M...

Solar panels don't have to be replaced annually. They have 30 year warranties as standard, and are likely to last at least 40 years. Spending $100 per month to eliminate your $110 (the us average) and rising electric bill makes sense even if you don't value renewable energy on principle. This isn't even considering the fact that you can sell renewable energy credits for the energy you sell back to the grid.

THE FREAKING ARTICLE UNDER DISCUSSION IS ABOUT UTILITY-SCALE SOLAR.

Why would electric bills be rising if solar is getting cheaper? If solar is cheaper and more efficient today, and utility-scale solar can afford efficiencies like motors (to directly face the sun throughout the day), and building the panels on the ground (easier to maintain, fewer rooftop deaths)... why would I want to jump the gun and purchase solar for myself?

Tell me, do you think you can beat $.06/kWh that Utility-scale Solar is getting TODAY? Do you think you can beat the estimated cost of $0.03/kWh in 5 years?

I THINK the article is trying to say that electric prices in America is going to start going down, thanks to solar. Depending on how quickly solar gets deployed of course.

-------------

Now yes, I do realize that buying your own solar comes with its own rewards. But we cannot ignore the risks. Gas prices have halved from their height of $4/gallon, and other forms of energy have also dropped in price.

Most noticeably, solar. No reason to buy solar yourself if you can just wait for the utilities to deploy solar after all.

First off, that 40K was the cost 10+ years ago, not today. Even so, lets be honest - the population of HN is not the median household. Even if the average American cannot afford to pay cash for solar, many software engineers probably can.

> The typical American median household income is $51k.

The relevant number is "Amercian median house-owning household income"

That is a slightly more nuanced question than you might think.

First, I work from a baseline cost of $19K, even though the list price was closer to $40K I didn't pay that for the system so I use the actual cost in my calculations.

Second there is the point where the money you've saved is equal to the money you paid, we hit that point about 10 years in. And then, depending on the life of your system (which has "positive cashflow" at that point) determines your overall rate of return. The replacment inverter (which is actually going to replace both inverters) is $2K ("upgrade" pricing from the manufacturer) And as the inverter was failing our system was under performing (so not generating as much power). The question will be how much longer am I willing to run the panels. The warranty is 25 years, so in theory another 10 years but the manufacturer (Sharp) no longer makes them and cannot replace them under warranty (they can only offer to repay you to buy a panel from some other vendor with equivalent specs and size).

So from a money perspective, had I used the $19K and put it into an S&P 500 ETF in 2003, it would have doubled by now (SPX was 1,008 in 2003, its over 2,016 today). So "bad investment" comparatively. If the panels continue for an additional 8 years and PG&E's costs stay about the same then I'll have generated about $20K in value from them so that would pencil out to a ARR of about 3.5%. Initially I funded the panels with a refinance of the house loan and that was at 6% but that has since been refinanced even lower. However had it not been, at my original purchase I'd still be running a deficit trying to both pay back the house and generate cash from the solar.

Interestingly for me, with the $7K it would cost to re-implement that system today, and 4% mortgage rates, it would have a rate of return of closer to 14% (10% if you subtract 4% as the cost of capital for a mortgage refi) and pay for itself in a bit more than 3 years and have doubled the return in 6. The challenge is additional regulatory changes which get incorporated into new installations versus the regulation regime I operate under based on my 2003 install date. I wonder sometimes what the trigger is for resetting the project's origin date.

Don't forget about taxes. Interest on that 6% loan get's deducted from your income which is an arguable subsidy. Alternatively, you also avoid paying taxes on your S&P returns.

In many cases solar is really close to a no brainier. Which is why Florida Utility's have tried so hard to block residential adoption.

> In many cases solar is really close to a no brainier. Which is why Florida Utility's have tried so hard to block residential adoption.

This is actually turning into a hollow victory for Florida utilities. To bring people up to speed, Florida outlawed homeowner PPAs [1] (which locks out firms like Solar City, who install the panels and sell you power; no out of pocket cost for you, and you get solar immediately).

With the rapid decrease in panel costs, and the uptick in firms who are providing extremely cheap (or even zero percent loans in some programs!) financing for solar, Solar City (and other installers) are moving towards a financing model, which kills Florida's efforts to stop the spread of distributed rooftop solar.

Disclaimer: I did some volunteer work for the non-profit who attempted to fight utility legislation in this space [2].

[1] http://www.politifact.com/florida/statements/2015/jan/16/flo...

[2] http://www.flsolarchoice.org/

The accelerating payments in the PPAs might not be so great if electric prices drop due to solar (in the example below they go up 2.9% per year).

https://www.solarcity.com/sites/default/files/sc-contract-re...

Being responsible for the full 20 year term is also a somewhat onerous financial agreement.

> Being responsible for the full 20 year term is also a somewhat onerous financial agreement.

I don't think so. Is it wrong to be responsible for a car when you lease it? Different asset, different terms.

A car is usually a much shorter lease with much better liquidity. There is a robust market for transferring a vehicle lease, the PPA is as likely to derail a sale of the house as anything else.

Usually, it's a more complicated issue, something like: "Historically, grid maintenance costs are amortized over electricity consumption, but when some people become net contributors, that breaks the model, since usage isn't high enough to pay for maintenance."

Of course, the correct solution isn't to compound one perverse incentive (out-of-sync fixed vs variable pricing) with another (ban on solar or refusal to buy); it's to change to a system of decoupled maintenance and power pricing.

The concern runs deeper than this. You can go off grid with solar for minimal additional costs, so they fear people will simply disconnect from the grid. Couple this with for profit electric company's and bribing/lobbying is the 'solution'.

I think you're being a little unfair with the S&P comparison: you should be comparing the returns on your actual investment with the expected returns on the S&P, not its actual returns. The stock market got a 5.4% return over that time, yes, but that's above average; we should expect its long-run returns to be close to the rate of economic growth, or more like 3%. And it could easily have been zero or even negative over a short time like 13 years.

By comparison, the risk that your solar panels will stop producing electricity, or that someone will invent Mr. Fusion and drop the price of electricity through the floor in the next decade, is quite low.

May I ask where you got your 3% because that number is very low compared to any number I have ever read? This Wikipedia chart shows annualized returns to be 10.47%. That is >3x your 3%. https://en.wikipedia.org/wiki/S%26P_500_Index#Annual_returns

3% is an estimate of the rate of economic growth: http://www.tradingeconomics.com/united-states/gdp-growth As I said above, we should expect the market's long-run returns to be close to the rate of economic growth.

It's true that stocks in the US in the 20th century dramatically outperformed that 3%. This is for three reasons: first, up to about 1975, the world's economic growth rate was higher than 3%, due to the Second Industrial Revolution; second, up to about 1975, the US's economic growth rate was even higher than the world's, because it was taking over the markets previously supplied by the bombed-out economies of Europe (especially the UK) and Japan. Third, since about 1970, the share of economic output that went to owners of capital (rather than labor) increased dramatically.

Now, the third of those things probably can't happen again, because capital's share of output is already super high. (It's not that it can't get higher, but it can't go past 100%.) The second could happen again, but if it does, the US will be in the position of the UK, Japan, or Germany — it's now the Single Superpower (not even a mere Great Power) who could lose market share, probably to China or to a non-nation-state power. Investors in Japan's and Germany's stock markets in 1925 or 1935 didn't do so well.

The first, well, that's anyone's guess. It's a total wildcard.

It's certainly reasonable to posit a Third Industrial Revolution, made out of some of free software, nanobots, biotech, abundant solar energy, AI, and automated fabrication. I sure hope we get one. But if we do, it's not at all obvious who the returns will flow to. (Everyone, I hope, not just shareholders.) Accumulating capital goods, as we've been doing for three million years, is less important when your capital stock can double every 24 hours through self-replication. Breweries do not account for the quantity of yeast they have on hand as a durable capital asset.

And it seems equally plausible that we'll instead experience a new Bronze Age Collapse or Decline and Fall, as inexpensive DIY drones, very affordable precision projectiles, anonymous markets in assassination, and ubiquitous retail surveillance provide a decisive advantage for attackers over defenders in the physical world, just as their software counterparts have on the internet.

I understand the rate of GDP growth, the person you replied to specifically stated that they would have made more money on the SPX. Granted the S&P 500 is not guaranteed to go up, but historically it does.

"...first, up to about 1975, the world's economic growth rate was higher than 3%, due to the Second Industrial Revolution; second, up to about 1975, the US's economic growth rate was higher than the world's, because it was taking over the markets previously supplied by the bombed-out economies of Europe (especially the UK) and Japan."

Do you read the posts you reply to? Because the chart I linked starts in 1970. And you are discussing GDP when the post you were replying to specifically was talking about investing in the market.

There's not much reason (and even less empirical evidence[1]) to believe that U.S. stocks should follow U.S. economic growth rates.

[1]: http://www.economist.com/blogs/buttonwood/2014/02/growth-and...

To summarize the article, the long-run correlation between stock prices and economic growth rates is positive at 0.51, and in the short run the correlation is actually negative (no number given), because investors bid up stock prices in fast-growing economies, because they expect the growth to continue.

If the growth did continue, then they would make money, but often it doesn't, so they overpaid, so they get below-average (and often below-break-even) returns.

Also, per-capita GDP growth is irrelevant; what correlates positively with equity returns is total GDP growth, including the change in population.

So, on the contrary, this article provides a great deal of reason and even empirical evidence to believe that returns on US stocks should follow US economic growth rates.

I'm not an expert here, but doesn't it make sense for stocks to return higher than growth because of earnings?

For example imagine I own stocks making up 1% of in a company w/ earnings of $X, and market cap of 10 * $X. If the companies growth over a year is 3%, at the beginning of the year my stocks should be worth 0.01 * $X and at the end of the year 1.03 * 0.01 * $X due to the growth, BUT shouldn't i also have received 0.01 * $X (my share of earnings) in dividends that I am free to reinvest, giving me a 4% return overall?

If the company's value increases by 4% over the year, and it pays out one of those four percentage points as a dividend and reinvests the other three, you get the scenario you're talking about. (And it doesn't matter how much of that 4% is revenue minus cost of sales and how much is, say, increase in value of its holdings in another company or real estate.) But if the economy grew by 3% and the company's value increased by 4%, your company is doing better than the economy as a whole, and it's because someone else is doing worse. In the US over the last 40 years, a very significant "someone else" here has been the employees — as they have lost bargaining power, they have gotten worse bargains.

It seems like maybe you're saying that the revenues, and therefore the profits, don't count here because they're not part of economic growth, but just part of the ongoing economic activity. But what determines the P/E ratio, which is to say the return on capital (as a reciprocal), across the market? What keeps investors from bidding the market cap of the company up from ten times earnings to a hundred, a thousand, or ten thousand times earnings? It's the availability of other investments that they expect to grow in value at a higher (risk-adjusted) rate. If you can get a 16% annual return on your investment by buying solar panels instead of stocks, then the guy who does that will have 16% more money to invest in more solar panels every year, until either he bids the price of solar panels up (due to limited manufacturing capacity) or he bids the price of electricity down (due to limited transmission grids or electrical demand). The first of those is already happening; the second one should start happening in about 2024, earlier in some areas.

Now, you could argue that there's a difference between this solar panel maniac guy spending 16% of his capital base in solar panels every year, accumulating more and more solar panels and selling the electricity from them to buy more, and GDP growth, because the solar panel maniac is accumulating a stock, while what the GDP measures is a flow.

But note that by the hypothesis that the maniac is investing to get some relatively inflexible percentage return on his investment, he receives a flow of earnings that is proportional to that investment. And that flow is part of the GDP.

GDP growth has no strict correlation to stock market returns. Why not? Because corporate profits (eg the S&P 500) can grow far faster than GDP, as they did from 2002-2014.

You should not expect stock market returns to mirror GDP growth. The S&P 500 is not strictly representative of US economic performance, which is precisely why the huge corporations did so well with the cheap dollar and significant global economic expansion while domestic locked companies didn't fair nearly so well.

Your point that the S&P 500 represents large US companies, rather than all US companies, is well taken. Still, the process of centralization you describe (where most gains go to past winners) can't continue indefinitely; the S&P 500 companies (at least the ones in the US) can't account for more than 100% of US production.

Returns to the S&P should beat GDP growth even in the long run, steady-state.

GDP growth flows to both debt and equity. The debt market is actually much larger than the equity market and since its returns are lower than equities, and they both share GDP as a source of returns in the long run, equities should beat GDP growth in the long run. This argument isn't iron clad, but hopefully you can see the general picture.

The Gordon growth formula is taught in intro to finance classes to estimate returns to equity. The theory is that stock market returns equal the dividend yield plus growth in stock prices. Stock prices alone are in the long run expected to grow at the same rate as GDP, but the actual return should be higher by the rate of the dividend yield.

These are the most basic arguments against what you're saying, but I would also caution against assuming that any particular macroeconomic trend will end, especially that it will end in a timeframe relevant to decisions related to solar panel installations. Sometimes they just keep going. There is no mathematical reason that equity prices can't go to infinity, as required rates of return can decrease to zero. If the world becomes more predictable and stable, equities can keep becoming more and more valuable with no damage to finance theory.

Actually the markets are "supposed" to double every 10 years, which is said that on average over 10 years, the markets will grow 10% per year. Since the recession 8 years ago that has been much lower, but in general, that is the rule most industry people will give you. I work as a tech guy in finance and have for the past 8.5ish years.

Anyone who tells you to expect a 10% annual return from the S&P500 is lying to you. And probably trying to sell you something.

Really, I do not understand your reasoning since the S&P 500 has an annualized return of >10% since 1970.

https://en.wikipedia.org/wiki/S%26P_500_Index#Annual_returns

Just because the S&P has seen such returns over the last 40 years, doesn't mean you'll see those returns over the next 40 years. The US economy is aging out, has stagnant wages, etc.

Also we saw a huge drop in interest rates that won't happen again over the next 40 years.

Going to disagree with you here. I think it'll be impossible to raise interest rates much further without causing economic damage. See negative interest rate policies in Japan and Europe, and close to zero rates still in the US.

I 100% agree with you about the difficulty of raising rates. But I don't think they'll continue to drop like they have over the past 30 years.

I have a hard time imagining a world of -5% to -10% rates!

> I have a hard time imagining a world of -5% to -10% rates!

A year ago I would've agreed with you, but with the ECB at -.04 and Japan at -0.02, I believe it more likely than previously.

Heh, fair enough. It's certainly very surprising to see rates below zero. So, indeed, I am much less certain about the future!

Incorrect, please re-read my statement. An average 10% annual return over 10 years. As the other reply to this notes, history shows in general this rule has held since 1970ish.

The U.S. markets reflect the U.S. ascending to become the dominant world power over the course of a century. Naturally, the markets grew during this period of tremendous economic growth. The investment industry likes to extrapolate from this, and declare it a rule of the markets as if it's a law of physics.

If growth slows or stalls, eventually the markets will catch up. A market that grows independently of the underlying economy doesn't make sense in the long term.

For something to double in 10 years it only has to grow by 6.9% per year. This is from a somewhat unusual application of The Rule of 69. Latter is way of determining doubling time of something that grows by x%: just divide 69 by x and that will be the doubling time in periods.

So if the DB grows by 10% weekly, then it will double in 6.9 weeks. If the interest rate is 3% then the debt will double in years, etc.

The Rule of 69 is good for a approximation, that works well with low single digit increases.

Additionally, you'd have to subtract the monthly power bill from those returns. I.e. you can't say "I would have doubled my $20k return by investing it for 10 years", because you can't defer your monthly power bill for 10 years and pay it in a lump sum after you doubled your money in the S&P. Paying $100+/month for power would substantially impede the interest compounding effect.

No, that would amount to double-counting the returns. Yes, you need to time-discount future returns, and you may need to risk-adjust, but that's already taken into account.

The rate of economic growth has little relation to the stock market yield. For one you have forgotten about the dividends, currently around 2%. Now lets assume the company grows by 3%, so your shares will now be worth 3% more. But the total return will actually be 5%.

However here I assumed that there was no drop in optimism, or pessimism over the one year period. For if you were to bought in when expectations were high, your actual return would be lower.

Sometime the relation between growth and return is completely paradoxical. You would expect that in the past 100 years a portofolio invested in UK stocks to be dominated by one of US stocks. After all the first country went from being The Global Superpower to dubious second rate global player, meanwhile the US had done the same in reverse. Yet an investor in UK stocks would have been marginally better of.

Likewise you would expect China with its spectacular growth, to have brought impressive returns compared to the US. Yet that had not happened.

You aren't the only one to make those mistakes; I've explained where you went wrong in https://news.ycombinator.com/item?id=11623817 and https://news.ycombinator.com/item?id=11623377.

True, but its too easy to get lost in financial modeling. There were two high order bits in my decision, first was that the money was spent either way; Either I would be paying PG&E month to month, or I'd be paying off the system. And there was a good shot that the panels would generate as much or more energy for that investment. The second was that I felt it was the right thing to do, not a lot of people were in a position at the time to pay those sorts of costs and I really believe that finding better ways to power the world was a noble cause, by investing in a solar system, even if it was a 'bad' investment, it was jumpstarting the market for solar. That helped with the chicken/egg problem of people investing in new solar tech to meet a market that was (by the action of early adopters) clearly emerging.

So every time I find myself having this discussion in a group, there are folks who want to argue the financial model to "show" something (generally negative) about solar power. Either it's not a good investment, or it's just coal power used to make the stuff that now is generating not even as much power was was used to manufacture it, or it's causing more pollution by forcing utilities to turn plants on and off, etc etc.

I was fortunate that I could finance it without risking things like my kid's college fund, I live in an area where there is a lot of sun and mild weather so my house's "demand" is quite manageable, and as an engineer I get to live my belief that we can engineer solutions to the worlds problems like energy interdependence and climate change.

I am grateful that today, the systems costs have gotten so low that it's possible for more people to make that choice.

Just to be clear, I think it was a decent investment then (better than the stock market) and an excellent one now. I'm not one of the folks trying to show something negative about solar power.

I find your belief inspiring.

Dont forget your stock gains would have been taxed

Ops point was that the original price of 40k in 2003 is now 7k for the total installation. That will change your math somewhat :) So even with your low power bill it's more like 6 years.

> How long until you start seeing a return on investment?

Why can't the utility companies do the financing (upfront investment), place them on our roofs, and get a little bit of the profit? Seems like a win-win situation.

And otherwise government, or specialized banks?

this argument kind of annoys me.

"yeah, but how long before you see a return on investment?"

how about instantly?

this is what we did:

1) calculated our monthly electricity payment: $160 or so a month.

2) priced out solar to push our payment to net-zero-ish: the savings really start multiplying once you get down into the regulated tiers.

3) replaced our electricity bill with a solar installation loan.

what did we get in return?

instant insulation from rate hikes: http://business.time.com/2011/12/16/plugged-in-then-pay-up-e...

instant equity on our house.

oh, and look! i can now have a solar-powered car!

but yeah, if i happen to still live in this house in 15 years, sure, no electricity bill. and, i'm sure somewhere along the line i'll end up "making all my money back".

> instant equity on our house.

Depends. Solar doesnt necessarily add value. Depends on the appraisal. I only know because I tried to buy a home with solar panels. The homeowner had raised the price of the home to include his investment in the panels but the appraiser wouldnt include the panels in the appraisal.

Appraisals are not strictly tied to price of homes. Only the value for the loan. That's not to say you're not going to associate the two together (if you're buying a house with a loan), but the $30k one way or the other isn't a huge percentage of a 30 year loan.

Depends on where you buy. A 200K home in the midwest, 30K is a big percentage. The assumption being made here is that investing in solar automatically raises the value of the home. I am saying not necessarily. The example above was an appraisal in Madison WI, which, though in the midwest, definitely has plenty of solar installs.

Appraisals are supposed to be strictly tied to the price of homes. The appraisal shows how much the property would probably sell for on the open market today. The loan amount doesn't even show up on the report.

This is true, because the job of the appraiser is to estimate market value. If buyers will not pay a premium, they have no resale value. But in my experience buying a home in SFBA with solar, and getting it appraised for refi, it counted both times. (In the cost approach it was valued at $20k in 2013 and $10k this year)

As solar prices go down, surely the added house equity goes down with it?

But what happens when you no longer get free power under net zero agreements (which is going to happen), and the cost of the system drops, reducing the value further of the already depreciating asset?

They will continue to save money on his monthly power bill, to a lesser extent. They will still have the warm fuzzy feeling that their existence is putting less of a drain on the planet's resources than they otherwise would have. And they may have captured a great deal of surplus value, possibly even enough to pay for the system before these changes are implemented.

In the past 25 years, electricity rates in CA have seen a 3-4x increase. If this continues, then even as some of the advantages drop away, the comparison function (monthly electric bill) will also increase, likely offsetting a lot of lost value.

Re: Equity

Solar leases bring down the resale value of a home. If the equipment is owned it raises the resale value of a home.

I've sold 2 homes this year with solar leases. Both of them were great deals for the buyers netting basically the value of the lease off the full retail value of the home.

http://www.azcentral.com/story/money/real-estate/2015/07/17/...

$100 a month in the summer in Texas? You living in a shoe box in the panhandle or what? I spend $700 a month in August. Tell us your secret for real.

I live in TX and have never spent anywhere near $700/m on electric. Either you keep your AC at 65 or something is very wrong.

And I'm sitting here in Germany with my €30/mo bill. :)

What are you setting your AC to?

I live in a brand new home. Spray foam insulation. Keep the AC at around 74 year round. I also have natural gas running in to my house for my stove and water heater. All of my light bulbs are LED.

Is this DIY, or installed? If it's not DIY, mind passing along who you're using? Inquiring TX minds would like to know!

My wife and I designed the system but it was installed by a Los Gatos company that did not survive. As part of our education efforts, my wife completed a program to become a certified solar installer (you needed to be certified to get the full rebate at the time) but one of the women she met in the class was working at this company and it just made sense to give them the job to help them bootstrapping their company.

So what you're suggesting is to take the installer course and then hire one of your classmates.

Not really, I was just relating how it worked out for us. There are a number of Solar Power advocacy groups around, in the Bay Area we went to meetups of NorCal Solar[1] (back in the early 2000's they would tours where you could see houses that had solar and ask questions). Great way to hang out with like minded individuals and collect folks experience with various installation companies and system options. Installations are common enough these days that you can probably find someone who has already done what you are thinking of doing, and tell you how it worked out for them.

[1] http://www.norcalsolar.org/

Why not replace your current panels with new ones? If you can generate nearly 3 times as much electricity with the same roof footprint and be able to reuse your racks and electrical installation, you should be able to be in the black in no time.

Sort of, and sort of not.

I am already "in the black" as it were since the system has already provided more value than it cost to install and maintain. So no worries there. But 325W panels are physically larger than 185W panels (not twice as large but still) so replacing the 28 panels on the roof with them would get my raw input up to 9.1kW but I'd need roughly 33% more surface area. That would add another strut on the mounting system and the top row of panels would extend beyond the peak of the roof (now disallowed by the building code). However, it would be "easy" get get 16 in there, which would be an equivalent raw foot print (5,200 watts)

> And that is why it is a huge problem for the power companies

It is a problem, but not necessarily in the way you may be thinking. Peak residential power usage is in the evening when solar isn't available. Power companies therefore end up spinning down coal and natural gas during peak solar, then just spinning them back up again as the sun begins to set. [1]

So you haven't replaced the coal and natural gas plants, you're just running them less. This results in higher overall costs, because you pay $$$ to build huge plants then just let them sit most of the day, which results in higher per-watt cost of non-solar power because the infrastructure and maintenance is no longer amortized over whole-day usage.

[1] My friend, a manager of 30 years at a huge mid-west power company

Which is exactly why Tesla and other companies are investing in residential power banks. They have the potential for huge efficiency gains across the grid.

Being a manager at a large power company for 30 years is both an advantage and a disadvantage. For the past 30 years, the energy industry has changed incredibly slowly, so ones expectations of what is possible in the way of innovation is far far lower than it should be.

The "duck curve" that your friend is referring to will be solved in a variety of ways, from wind to storage to HVDC interconnects to the rest of the nation, to peaker plants.

In the future, coal is dead. No need to build any more of it. Nuclear is too expensive to build anymore. (Unless somebody actually does thorium innovation, but I'm not holding my breath...)

When storing a kWh costs $0.10, and there's also adaptive pricing to match supply and demand better, these problems will melt away.

It does require a huge mental shift, but the cost savings will make that happen

> When storing a kWh costs $0.10, and there's also adaptive pricing to match supply and demand better, these problems will melt away.

If the math and assumptions in this article are correct, then that's exactly the (wholesale) price point Tesla is aiming for with the Powerwall:

http://cleantechnica.com/2015/05/09/tesla-powerwall-powerblo...

There are a couple other (not yet released) energy storage solutions mentioned there that might get the cost down even lower - Eos Aurora and Imergy Flow Battery

It'd take over 1 BILLION Powerwalls to store half the daily usage in the US (using old usage numbers off Wikipedia).

I wonder if there's enough raw materials to make that realistic. And how to you manage recycling, repair, replacement, end-of-life concerns for all those batteries on that scale?

Not asking a sarcastic hypothetical. Genuinely curious. It's hard to wrap my head around numbers that big.

For reference I used this: https://en.wikipedia.org/wiki/List_of_countries_by_electrici..., divided it by days, then the Powerwall's 6.4kwh capacity and then halved that number.

4,686,400,000,000 / 365 / 6.4 / 2 == 1,003,082,191.8 Powerwalls.

Just throwing around "BILLION" doesn't make it seem big, you need to compare it the unit size.

A single gigafactory is going to produce 35 GWh in a year, which is about 5.3 million power walls a year. If their lifespan is 10 years, than we need to produce 1e9 power walls / 10 years = 100 million powerwalls/year to maintain that capacity.

So we'd only need 20 gigafactories worth to do this. And with wind and proper grid interconnects we won't even really need much storage at all to keep the electricity going; the national weather is very very consistent.

We will need enough lithium for our ~300 million cars and their batteries, which are probably going to be 50-100kWh each, which is far far more than storing half a days worth of electricity.

What if we used tens of millions of electric vehicles on the road as grid storage?

Tesla has already planned on it: https://i.imgur.com/oLBNeW4.png | https://i.imgur.com/pectzXn.png

That's over 3 Powerwalls every second. And I've got to think you're not going to see more than 75% original capacity in ten years as a best case?

I'm not as concerned about the factory as the supply chain, can we actually supply that much raw material, and what will mining it do to the environment? I assume lithium is much rarer than iron or copper. But I don't really know.

For reference 16 million vehicles were sold in the US in 2013, but many (most?) of those were trucks and large SUVs, which AFAIK aren't on the roadmap for any EV manufacturer right now. And then there's fleet/work vehicles, single car families in states without long distance transportation or quick chargers (like TX).

It makes me wonder if 20 years from now fuel cells won't completely obsolete batteries?

The number actually needed is a bit lower than that (I estimate half a billion), but the general question still stands.

Variable electricity needs already mean we use less electricity at night time [0]. Shift electricity expensive processes preferentially run at night to the day and using 80%/120% seems like a reasonable rough approximation. So we need 4,686,400,000,000 / 365 / 2 * 0.8 ~= 513,5780,822 kwh in the '12 dark hours'

Between current supplies nuclear hydro and wind we account for approximately 30% of electricity generation [1], on the assumption that electricity generation from these is constant, but can't be ramped up during the night, we get about 4,686,400,000,000 / 365 / 2 * 0.3 = 1,925,917,808 kwh. Leaving 3,209,863,014 kwh needed from storage, or 501,541,095 powerwalls.

[0] http://www.eia.gov/todayinenergy/detail.cfm?id=13131

[1] http://www.eia.gov/tools/faqs/faq.cfm?id=427&t=3

Think about if Tesla vehicles were used instead of Powerwalls: https://i.imgur.com/oLBNeW4.png | https://i.imgur.com/pectzXn.png

Your car isn't at the house while solar is being produced though for many/most people right? This seems unrealistic.

A lot of cars sit in carparks during the day.

I guess the implication being there'd be a massive number of charge spots and you could swipe your card to pull off the grid what your home is putting on.

But this would mean turning a car-park with just 40 plugs into needing 1,600 amps at 240v. With those grid connected homes having modest 2kWh solar installations you're talking 80kw/h. If you only spent 3kWh getting to work on average (double that for the round-trip) you'd fully charge the cars in a couple hours.

So I guess the goal would be to run your home off the unused capacity. But then you're putting a far heavier duty cycle on those batteries. Whose going to pay for them when that $10,000 pack needs to be refurbished in five years? Or do we just accept EVs depreciating down to zero when the pack replacement cost exceeds their value?

There may well be good answers to all this. Just some things that popped into my head.

It would seem at first glance to be very costly for the car park, the grid and the consumer. I'm not sure any technology with the depreciation schedule of lithium batteries makes sense financially or environmentally?

Thanks for working through some numbers.

My modest intended implication was that if we only care about total sums, where the car is doesn't matter too much, as long as it has access to the grid.

The economics could work out, if the car park charges you more for electricity than they pay the grid; and the grid your home less that it charges the car park.

The car park and the grid both take a cut. For the home- and car owner, this works out to a slightly less efficient battery cycle. (If you convert the money charged back into the equivalent amount of energy.)

Of course, if you are going to use your electric vehicle like as a battery like this, it's going to affect the battery's useful life. The same would happen with the single purpose battery you have sitting in your home.

Now, the performance characteristics one looks for in a car battery and a grid storage battery are different. So I don't know whether using the car battery as a home battery even makes sense. (Ie home batteries can be bulky, but better be cheap. Car batteries have to be light and charge fast.)

On a more refined note, one can play the same game, but only do it during spikes. Ie the car can stop charging during a spike in demand, and even uncharge if the spike gets big enough or the battery is already full.

This won't do much for the diurnal cycle (that we discussed above), but a contribution during the spikiest peaks might already be worthwhile.

My gut feeling is that we will see the demand shaping for charging, but I am more doubtful about whether we'll see cars actively feeding back into the grid.

I guess it could drive itself home after dropping its owner off at work, but that's probably too inefficient in most cases to make a full extra round-trip just to charge up with the panels at home.

Its probably sitting at your employer's lot. A lot that that would have charge stations.

None that I've worked at. And aren't small businesses the biggest category of employer?

I guess toomuchtodo is talking about the future, not the present.

I am!

Residential is only about 1/3 of consumption. I guess at least industrial won't be using Powerwalls to store backup power.

https://www.eia.gov/electricity/data/browser/#/topic/5?agg=0...

It might not be possible to make all those batteries using lithium, but that doesn't really matter for stationary batteries.

That's a huge factor I hadn't considered. Thanks.

Raw material supply is a big issue; see Berkeley physicist Tom Murphy's calculations: http://physics.ucsd.edu/do-the-math/2011/08/nation-sized-bat...

He's mainly talking about lead but for lithium it's even worse.

A lot of things look great until you look at the scaling limits. Hydro storage is another example; Murphy's got a post on that too.

If these numbers are even close to accurate, this should be the top post.

It's no use for everyone to argue over wether a completely implausible idea is financially competitive on a small scale when the implication is we're talking about scaling on a national level.

> Being a manager at a large power company for 30 years is both an advantage and a disadvantage.

He is definitely biased against solar, but is acutely aware of the costs it presents to traditional power generation and definitely well qualified to comment on them.

Right, and my point is kind of that the entrenched energy interests have been wrong time and again about solar, wind, and now storage. As well as HVDC.

They don't understand these things, they see less than half of the equation because they don't want things to change, and they only see the problems and have no interest in solving them.

IT wasn't that long ago that they were saying that solar was impossible, or that wind would never be affordable.

They were wrong about that and they will be wrong about how difficult it is going to be to adapt to lots of intermittant renewable energy powering the grid. They will complain vociferously, and they may be able to talk about some of the difficulties, but we can't trust their perspective on the big picture.

> In the future, coal is dead.

What about coking coal, for the production of steel from iron ore?

I've heard the claim it's indespensible but that's not true from a chemical point of view. But possibly from an economic point of view.

Nuclear could be made cheaper (even with Uranium) by updating regulations.

Fission plants are held to a much higher standards of safety in terms of eg decrease in quality adjusted life-years per Gigawatthour than any other form of producing electricity. Even solar.

(Though most deaths and injuries from solar come from people slipping off their roof when installing residential capacity. If memory serves right.)

The problem is they have a huge spinup and spindown cost. So as long as we have solar, we need power that we can use at those times when solar is unavailable.

A nuclear plant today would cost something like $6B that's not a regulatory tweak.

The problem with nuclear is waste disposal (still not figured out, and a will be a problem for decades/centuries after the plant is closed) and amortization of billions of capital costs.

With the price disruption potential of other technology, it's a bad bet, and has been so for many years.

Nuclear was only ever "viable" for political reasons. We had to have enough nuclear weapons to extinguish mammalian life nineteen times over. Eighteen times would have been pathetic. It was all a boondoggle anyway, so the war pigs were happy to spread a bit of cash on the civilian side...

There are nuclear plants that generate isotopes for medical purposes.

Those are not the same plants that generate power for the grid.

> Peak residential power usage is in the evening when solar isn't available.

Assuming it's not a battery backed system, prices on those are dropping (or more correctly remaining stable while capacity slowly climbs).

Dropping, but still incredibly expensive compared to the alternatives =( ~doubles the cost of solar.

Can validate. The problem with electricity is that there is no large scale storage like there is for other forms of energy like NG and Crude. Until someone comes along and figures out how to store electricity, this will continue to cause grief to power companies. Power plants are really just options, if the price per kWh is at a certain point then it makes sense to spin up or take down a plant and generate power. Adding a bunch of highly variant generation to the grid can make the market more volatile since there could be a lot of up and down with generation facilities.[0]

That said, there will be teething pains but this is a net positive thing that is happening. Growing up I lumped solar into the perpetual 10 years away category. It looks like I am going to see solar be competitive after all.

[0] I implement trading and risk management software in the energy sector, including Crude, NGL, NG, and electic.

Some countries store energy by pumping water up a dam. Seems efficient.

Whoa! That sounds really cool so I looked it up. It's called "Pumped-storage hydroelectricity"

https://en.wikipedia.org/wiki/Pumped-storage_hydroelectricit...

Yeah, and I believe that it's the only game in town for storing really large amounts of electricity.

Also interesting: https://www.quora.com/Can-electricity-be-stored

Very. One of the first was in Scotland. Great to visit as you drive into the mountain and I think one of the Bond files had a scene filmed in it

https://en.wikipedia.org/wiki/Cruachan_Power_Station

Nope. It was filmed in Switzerland. https://en.wikipedia.org/wiki/Contra_Dam

Different films. "The World Is Not Enough" had scenes filmed at Cruachan, "GoldenEye" was at Contra.

It's very efficient and it's a great solution overall; the only problem is there are only so many dams we can build, since each one requires drowning a valley.

Solution: swimming pool on the roof.

http://www.fastcodesign.com/1672202/you-deserve-a-house-with...

The more sun, the more water in the pool. Win-win!

Seriously though has anyone crunched the numbers on rainwater storage for microgeneration in a domestic setting.

Could I efficiently use excess solar to pump water in to a house roof storage area and generate electric from that?

The Tesla Powerwall has 6.5 kwh = 23.4 M joules.

Gravity potential energy = mgh. Suppose pool is 10 meters up, then you need 239,000 kg of water = 63K gallons or 8400 cu ft. This is a huge pool: 29 ft. x 29 ft x 10 ft.

You could use the city water supply: borrow water through a turbine at night, and return it during the day :-)

Or have pool up very high, for example on a cliff overlooking the Mediterranean:

http://inhabitat.com/crazy-home-carved-into-a-coastal-cliff-...

They crunch the numbers here: http://physics.ucsd.edu/do-the-math/2011/11/pump-up-the-stor...

The energy in one gallon of gasoline is equivalent to the potential energy stored in 13 tons of water one kilometer up

The outflow from an Auckland homes storm water is not insignificant - an average roof would have something around 5 cubic metres of water come off it several times per year.

I remember a while ago on the show "Let's Get Inventing" (Saturday morning kids show with kids inventing stuff, think it was on TV2), they tried generating electricity from drainpipes, they couldn't get enough power to even power a servo squeezing the trigger on a spraybottle, they had to get a great big firehose from an firetruck to actually generate anything.

"Have you seen the swimming pool on the roof?"

;)

Though you need less volume if it is only being used for overnight storage rather than long term rainfall storage. For example, to store enough energy to produce 1GW for 1 day (~10^5 seconds) with a head of 100m, use Pt=mgh to work out you need to store:

m = 10^9.10^5 / (10*100) = 10^11 kg of water. = 10^8 m^3

This is not a big reserviour, being 1/20th of the size of Warragamba dam's reserviour (in Sydney). One valley could provide 20GW for a day. Compare that with demand for where I live:

http://www.aemo.com.au/Electricity/Data/Price-and-Demand/Pri...

Peak demand for 7.5M people is 9GW, with an average closer to 7GW. One valley could provide overnight storage for over 20 million people, with first world demands (all of Australia). The limitation is transmission and generating/pumping capacity, rather than storage volume.

Note that's a winter peak you're looking at.

The highest summer peak appears to have been just above 13GW. http://www.wattclarity.com.au/2016/02/highest-electricity-de...

However your point still stands I believe.

But the summer peak is due to air conditioning during the day, when there's tons of "free" solar energy.

I grew up by one of these in NJ: https://en.wikipedia.org/wiki/Yards_Creek_Generating_Station

I remember parking at the lower reservoir and hiking to the upper one and being amazed at how big the water pipe is.

Flywheels are another option: https://en.wikipedia.org/wiki/Flywheel_energy_storage

Pumped storage is routinely used to store energy. It's not theoretical.

Has Flywheel storage every been seriously used in large-scale commercial applications? Someone mentions it on every energy-storage thread, and I'd like to know if the people suggesting it are just spinning our wheels.

It's not even remotely on the same scale. There are three massive utility-level flywheel deployments according to Wikipedia that provide 15 minutes of output.

Edit: Seems the purpose is purely frequency regulation, rather than storage per se.

The JET fusion reactor in Oxfordshire uses flywheels to provide very large pulses of electricity for short periods of time (a minute or two iirc). The reactor requires too much energy to run directly off the National Grid.

Sounds like they use it for high output rather than efficiency though. Still interesting that it has real world applications though. Shows that the technology has potential as well.

As I recall from a tour I went on of jet 30 years ago there are a large bank of flywheels which spin up over several minutes, these are then rapidly discharged to a bank of capacitors which are then used to power the experiment, I believe the duty cycle was 9 minutes. [1][2]

I believe some electric cars used capacitors to store regenerated electricity from breaking.

"More Ampères please Mister Woodbine." - Road to Welville

[1] - http://pia.sagepub.com/content/200/2/95.abstract

[2] - http://www.euro-fusionscipub.org/wp-content/uploads/2014/11/...

FES is used in non-kill-zone habitable solutions like datacenters, bottoms of passenger trams/hybrid buses and electromagnetic aircraft catapults. The historical issue with FES is unscheduled, rapid disassembly, but carbon/kevlar composites have been shown to have greater integrity with least unsprung structural mass (because you want the most mass as close to the rim as possible to ensure highest moment of inertia.)

FES has 10x specific energy than supercapacitors or batteries with no memory and precise state of charge. Magnetic bearings and hard vacuums make them quite efficient.

I thought I read that some water districts run their pumps at reduced volume during peak hours and top them off before or after. It's a smaller volume but it's already a solved problem.

And it allows you to push some levers and dials as to whether it's cheaper this year to increase your water capacity or your power capacity. City planners love that kind of thing.

Works great if you have the right geography.

Better than nothing, but not that efficient. I took the tour of the somewhat mis-named Dinorwig Power Station (really a pumped storage facility) in Snowdonia, Wales. The figures they quoted there put it at about 75% efficiency. It's not really supposed to be for 24-hour power smoothing, more for rapid response to sudden demand; it's a lot faster to open a valve on a turbine than to stoke up a coal plant, and for some spikes (such as the example they quoted on the tour, when everyone puts the kettle on when Coronation Street finishes) you have a 30-second window or so. However, as demand has increased it's being used more and more, and the more it's used the more power we're wasting.

Interestingly, it does not use a dam. There's a natural lake at the bottom of a mountain and a man-made reservoir at the top, and the entire pumping facility is completely inside the mountain; it's not at all obvious that there's anything there at all from the outside. I think about that whenever people moan about the environmental impact, or flooding valleys.

We have a lot of good technologies already, the problem is they just don't scale well.

I can envision older warehouses in an industrial district being converted in to vacuum flywheel storage sites where power fed in to the grid earlier is buffered and then released back to it.

Changing our culture is another possible approach. Power is used in the evenings because that's when most people get off work/home/etc and they tend to have /that/ time to do cooking and cleaning (thermal cooling / heating are more solvable with changes in materials and building shape than culture change).

Price electricity differently through the day according to its scarcity and people might eventually adjust their routines to reduce evening usage.

That seems backwards. The aggregate preferences and habits of humans should be seen as an incentivizing force for the creations of new technologies, not the other way around.

Yikes. Yes, of course technology is driven by human preferences. But, No, humans must occasionally accept that certain habits are not sustainable given current and near-future technologies.

I generally agree with your position but in this particular scenario the people with the greatest capacity to adjust their behavior are the people who will be affected the least financially by a hike in peak prices and thus less likely to change or more likely to invest in solar at home, while those with the least flexibility in work arrangements and spending, e.g. lower income earners working in the services sector, will be affected negatively the most and unable to work around it.

If the spot market was the status quo, and someone was suggesting a change to the current system of flat prices, one could make the same argument. (Ie already well off people are flexible enough to make use of the new system better.)

More variant pricing will better distribute usage. The unfortunate effects on the poor can be negated by a sales tax paid back to all citizens equally as a lump sum.

Well, in that case, pricing electricity differently through the day will encourage people to develop new technologies for cheaply generating and/or storing electricity for evening consumption peak.

That's like saying market economies are backwards. We need to match resources to people somehow, and markets are a very popular way to do that fairly and efficiently.

I'm not saying that markets should be unchecked but it's very strange to see such naked Marxism on this site.

I don't see any Marxism there. Marxism isn't just anti-market. It's a complex ideology.

It's a two way street.

Aggregating the preferences via price will drive new technology and business models.

It doesn't have to incentivize new technologies. It could just as easily incentivize new business models. Imagine a laundromat that sells "FREE DRYING" during the day. Heck, I bet you a lot more people will do laundry during the day time. Similarly, power companies can give incentives for more day time power usage. A lot of people already follow night time power usage today so its no reason to think it wouldn't work.

Variable pricing would create those exact incentives.

You are correct- there are energy storage solutions out there, I should have clarified my statement above. The issue is that they cant store power grid levels of power in an efficient, compact, and scalable manner. This is the rub. Maintaining a giant battery bank or other measures require maintenance and large capital expenditures.

Oncor solicited a study that showed that a mass install of Tesla Powerwall devices would be an economic solution to this problem [1], at which point all the generators lost their minds and lobbied the PUCT to prevent Oncor from destroying their market [2] (because of their position as a Transmission & Distribution Service Provider in the market, it would require a change in law for Oncor to be able to implement the project).

[0] Work for a multinational in their energy & utilities consulting practice; above comment is my own.

[1] http://www.brattle.com/system/news/pdfs/000/000/749/original...

[2] https://www.texastribune.org/2014/12/15/state-law-could-shor...

It's interesting to see the stark contrast between the naysayers that don't have information to back their claims (such as comments sibling to yours), and the people who have looked at current tech and made realistic assessments like Oncor and Brattle.

A lot of people are willing to make confident, but very wrong, statements based on out of date information. It serves to protect entrenched interests and stop competition, but I have a feeling that disruption is far closer than anybody is publicly saying.

X is realistic and smart because it agrees with my opinion

You're amazing

Thanks. But it's not realistic and smart because of that, it's realistic and smart because it examines the facts at hand and makes plans instead of handwaving. This is an important distinction.

http://www.lightsail.com/ has been working on this for a while now

Instead (or rather in addition) to storing power, we can also get better at coordinating demand.

There are already programs for industrial users to get electricity for much cheaper, if they can tolerate power cuts during peak demand. Those programs will become more and more rewarding to join and extend and automate as supply gets spikier.

Is there a way to coordinate demand without asking thousands of people to give Alice the ability to shut off their appliances?

No, although the current system is pretty tame. The electric company can turn your electric water heater or air conditioner (depending on geography and utility) off for 15 minutes at a time, and in return you get a credit on your electric bill. Its opt in.

Sell electricity at spot prices, give consumers access to that spot price, and you'll see a lot of demand flatten simply through natural market forces.

Where I live, I pay five times more for electricity between peak hours of 2pm and 8pm than I do between off-peak hours of 10pm-8am. (The remaining hours are priced at a medium level.) This has changed my behaviour, in that I now tend to wait until bedtime before switching on the clothes dryer and dishwasher.

Actually, there already is, it's called OpenADR.

http://products.openadr.org/?posts_per_page=-1

Yes, industrial plants will turn off production (for instance at an aluminum smelting plant) in relation to the frequency of the grid. Grid frequency decreases slightly when demand starts outpacing "supply."

That frequency change used to be a natural reaction from the generators.

I wonder whether they create that signal artificially with electronics these days, or if it's still a natural consequence of the mechanics of the spinning generators they run in power stations?

That's great but then instead of increasing the effective capital cost of the generating plants, you're increasing the effective capital cost of the industrial facilities (by lengthening the time to pay off financing).

It'd be interesting to see a study comparing the two options.

The incentives create a market in which the energy consumer and producer can trade in their existing inefficiencies. The market will decide where it is best to make the compromise, whereas before there were just wasteful externalities.

If you have an industrial process that can cope with intermittent power supply, it may be only slightly more expensive to design or build so that interruption of power won't result in interruption of production. If the overall cost increase is less than the decrease of energy costs due to incentives, there is no downside.

The energy producers likewise price the incentives so that their loss of revenue is lower than their cost savings.

Unless of course the market is created and operated by Enron, then we're all fucked.

Yup. Having many distributed li-ion battery walls charging at night for peak assist during the day is one way to level out demand and make the energy infrastructure more resilient in a Google-servers-like way.

I recall reading a while ago about using molten salt storage at large solar concentrators. Did this ever take off? The theory was you generate excess power during the day and you can use this excess to heat the salt solution which then release thermal energy during the night.

Does anyone know more about this? Is this able to meet baseload demand?

Solana Generating Station, a 280MW solar concentrating plant, currently, uses molten salt, which allows for six hours of energy storage.

https://en.wikipedia.org/wiki/Thermal_energy_storage#Molten_...

This one in Nevada came online not too long ago and is quite large -- apparently has 10 hours of storage and according to Wikipedia it generated 9.1GWh in February 2016 alone.

https://en.wikipedia.org/wiki/Crescent_Dunes_Solar_Energy_Pr...

Thermodispatchable solar, even if the word does not exist, has been a recurring theme. But installations seem to be one-offs that are rarely followed by a direct successor project with the ever dropping price of photovoltaic.

In areas with cold weather, one of the most interesting (and underrated, due to only making fossil use more adaptable) developments is the installation of huge, insulated hot water tanks, to make the power generation and the great generation of combined cycle plants individually dispatchable.

Sorry for the late correction: in the last sentence I meant cogeneration plants, not combined cycle. (which would typically not be combined cycle, because the heat not captured for electricity is not wasted in cogeneration)

It's a problem, but the nature of the problem varies a lot from country to country. In the Netherlands, we don't have enough renewables yet for this to be an issue (~10%). Once you start getting to Germany's penetration, you start to see some issues with balancing the grid and meeting peak demand. There are more options than just storage, though.

Demand side response is already used in industry to regulate electricity demand and smooth peaks. Smart meter penetration will allow utilities to do this more and more in the residential sector too.

Supergrids are also starting to emerge and indeed, some large grid companies are pushing hard for international interconnects. (China wants a supergrid). Countries are building out more and more HVDC interconnects, both across borders and within countries. Once you have a network of utility scale renewable sources across multiple countries, meeting peak demand becomes more a matter of coordination between grids. Europe for example, is looking like a very interesting area for this right now with planned interconnects between North Africa and Southern Europe.

Since we're all citing employment, I work for a renewable energy company :)

I would propose a global power grid as a solution to this problem, on which the sun would never set. The only problem is that earth is not set up well for this: the Sahara would be the solar workhorse of the planet, and the consumer of all this power would be Hawaii.

Panels islands.

What if the grid connects (residential and commercial) across time zones, one generating for the next with no need of storage devices?

Maybe if we had room-temperature superconductors. For now, transporting huge amounts of electric power across many thousands of miles is very, very inefficient.

HVDC lines work very well even if they are quite expensive.

Paging Buckminster Fuller.

The major challenge now is no longer PV and gridtie inverters, but energy storage. Whether it's batteries, pumped storage hydroelectric, whatever.

$$$ per kWh stored (and the lifetime/cycle life + operating costs of that storage) is a key benchmark.

Wait 5 more years and batteries will become cheap enough to even remove that constraint

I am clearly out of my depth here but what if we take the newly daytime unused/idle coal power or natural gas power for other endeavors like sea water desalination or just pumping up water into a watertower when daytime energy cost is low and adding increased hydro capacity in the evening when the energy cost is higher?

Those sources of power have a higher marginal cost and are only spun up when the spot price is high enough - in peak demand times.

What you are talking about is demand shaping.

It's already happening, but I predict we'll see more of that in the future.

Eg lots of industrial applications like smelting aluminium can do with short-ish power cuts. In return, they get a steep rebate on their electricity bill.

The power companies can get overflow from solar and wind and water and redistribute it at a profit while paying the residential over suppliers. It's on the power companies to build the infrastructure like batteries to take advantage of all this free new power.

"Lets not move forward until every conceivable issue is solved" - said every entrenched interest ever.

This is why we need a major leap in battery tech to make solar more viable.

Plus there is the problems of cities with not enough sunshine and otherwise problematic weather (snow on the panels).

That's a good thing. Peak power usage is midday, so providing additional supply at that time avoids the need to site new plants, which costs millions or billions of dollars.

It also makes coal less economical and makes gas plants, which are cleaner and safer to operate more economical.

Peak load is actually around 6pm.

I guess it depends on country.

Some countries need AC, others need heating.

Sorry for the noob question, but isn't there always sun somewhere on the planet? Are electricity grids not globally connected, or would it be lost in transmission?

They are not globally connected. And losses become significant after a thousand kms or so. You're not going to get to the electricity to the other side of the world where the sun is shining.

You need local storage. As much as is said about batteries, the only real solution here is hydro. Expect to see every viable valley start to get dammed over the next decade or so.

>Expect to see every viable valley start to get dammed over the next decade or so.

Except that dams are instead being removed for a variety of environmental and associated reasons. Free lunches are rare.

http://www.csmonitor.com/Environment/2014/0803/Setting-river...

This claim about peak power usage is untrue, at least for California. For the past 20 years in California, the annual peak electricity usage has ALWAYS occurred between 2pm and 5pm.:

https://www.caiso.com/Documents/CaliforniaISOPeakLoadHistory...

I used to work at a power company as well.

(It's true that the daily peak is in the evening and that won't be helped by solar. But capacity is built to handle the annual peak, not the daily peak, and because the annual peak tends to be hot afternoons, solar actually will replace other generation in the long run.)

Well, you could just massively overproduce solar, and use the excess to pump water up a hill. Also, I think there are certain externalities with coal that your friend never had to pay for, like Mercury poisoning. Reducing the amount of time coal plants run may be beneficial to reduce those externalities.

There is another way - minute by minute pricing. Much of the electric power usage is not required to be right now, and can be deferred - running the refrigerator, A/C, hotwater heater, dishwasher, charging the car, etc. With real time spot pricing information available, the deferrable usages can be deferred until the spot price is cheap.

I bet this could even out demand quite a bit.

With the current flat rate pricing structure, there is no incentive whatsoever to shift demand to blunt spikes.

> Peak residential power usage is in the evening when solar isn't available. Power companies therefore end up spinning down coal and natural gas during peak solar, then just spinning them back up again as the sun begins to set.

Would it be possible (in an utopian world) to actually have a global power network and route electricity produced during the day in one area across multiple timezones to an area where the demand is greater and no available solar? e.g. Electricity produced in West Africa at noon to be delivered to .. Tokyo, where it would be 9PM.

I understand that politically this is almost impossible, but I am curious whether there are any technological impediments for this to be feasible.

Not too long ago some of the comments here were saying "how will we feed all of those millions of EVs out there if the EVs do end up replacing most ice cars?"

Well that's the utilities opportunity to survive. Utilities should actually lobby against ICE cars and pro-EVs. They will be the ones charging EVs everywhere. Not everyone will afford to charge their own EV at home where they have solar panels.

Would you be able to share what company quoted you for $7k? I'm going to be getting quotes on a solar installation, and your quoted price seems rather good. Do you get to reuse parts of your old installation?

Well in my case we already have the mounting equipment on the roof and wiring. And we were looking at new panels and a new grid-tie inverter, so 16 x 325W Kyocera panels was $5,600 and the SMA Sunnyboy 5Kw inverter was $1900 (total $7,500).

I would not expect a company to quote a new install for that price since they will have to add the mounting system and pay their installers for a day's labor getting everything set up.

[1] http://www.solar-electric.com/

Other than the fact that $7k still isn't that cheap (for many people)--how long does the "average" home of 4 take to recoup that cost?

I think the barrier is not only cost, but also know-how. Few people are likely to tackle a challenging project like this with a $7k out-lay.

The huge power companies still control the grid in many countries though. I hope improvements in batteries/storage will remedy this and we'll shift towards community grids of sorts. You'll still need the traditional grid for peaks but the power is shifting (pun non intended). It's a great development, I haven't looked into the net power needed to produce solar/photovoltaics panels but it was dropping quite a bit as well.

I'm a bit surprised there are no mini wind turbines. I read about some promising developments (with close to 0 noise output) but it seems to have fizzled.

Hey Chuck, I've been waiting for solar to come down and it sounds like it has. When you priced it, was it just for parts or was that $7K installed?

And for the do-it-yourselfers, how much of the cost is installation now? Is it practical to do most of the grunt work yourself and then get an electrician in to do the final part?

As mentioned elsewhere it was just parts. Installation of grid tie systems isn't hard but does have a number of building code things you have to follow (at least in California). At the time we did the install my wife took a solar installer's course which went over the current code.

I can recommend that as a plan of action, find a local group offering job training as a solar installer and take it. Then using that knowledge you can design an installation that meets your local code.

This might seem like a weird thing to complain about, but am I the only person who is sick to death of headlines of the form "X just did Y"? It's the "just" I object to. It seems to be some sort of trend over the last couple of years.

I think it's to make it seem more dramatic or something. It just happened! My god!

In this case it is especially ridiculous, since the article describes something that happened over the course of 16 months.

I was just (sorry) gonna post the same thing.

'Just' and '16 months' are pretty far apart in my mind, I found the headline quite awkward to read because of it.

Yes. I think headline writers are trying to force things into this form.

Maybe people like fresh things?

Here's an A/B test I recently ran on some notification messages. There were two messages, only difference is the word "new" in there.

    A: "You received a message from the admins about your Facebook page."
    B: "You received a new message from the admins about your Facebook page."

A clickthrough 15.64%, B clickthrough 15.95%.

About 1000 samples per group. Not sure if noise.

.3% on 1k? That's three people.. Yes, noise.

That's a great way to get a gut check on the validity of the result. Put it in real terms.

I'm often annoyed when reading reports that use percentages instead of the actual ratios. For example, "2 out of 3" is much better than "66.7%".

https://www.mccallum-layton.co.uk/tools/statistic-calculator...

  Sample Size: 1000
  Observed Proportion: 15.64%
  Confidence Level: 95%
  Confidence Interval: ±2.25
  Range for the true population proportion: 13.39% to 17.89%

It's noise.

Hmm, I tried playing around with this tool.

When I enter 250000 in sample size I get ranges that don't overlap. Does that mean I would need that many samples to answer this?

Yes. The bigger your sample size, the bigger your ability to see small effects. A test with 1000 elements can only tell apart big effects; a test with 250000 can tell apart much smaller ones. This is the idea of https://en.wikipedia.org/wiki/Statistical_power

I think it's just a more casual and less formal way of saying something happened. I can't picture an illustrious newspaper of yesteryear ever writing a headline of the form "X just did Y". But due to the rise of social media and the progressive commoditization (not using either of those terms as an epithet as so many do!) of news stories, users respond better to headlines that read like it's something their friend would say rather than being the headline of a newspaper.

I don't read Buzzfeed, the pioneer (I think?) of this trend, but I read the similar Polygon gaming news site, and two of its five lead stories at the moment sport conversational style headlines: "The Hearthstone legendary cards you must craft ASAP" and "The film Apocalypse could have looked like this".

"X did Y" works equally as well as "X just did Y." I'm sure they use 'just' to make the article seem more immediate. "The Price of Solar Power fell 50% in 16 months" has a markedly different tone than "The price of solar power just fell 50% in 16 months". The headline with the work 'just' seems like breaking news. The other variant seems like a normal report that you can pick up an read at your leisure.

Most articles in a normal newspaper don't do this because they don't have to. Only the headline needs to be sensationalist to sell the paper. On a website, every article needs to drag people in. The current headline is click-bait. That would be forgivable if the entire article wasn't terrible as well. There is very little content or analysis, everything is cribbed from other sources, including the charts. I will give the author credit for linking all of their sources, but that is where my praise ends.

You've just posted an example of the recency illusion.

Its SEO/Click-bait 101 unfortunately. It is sensationalisation of something to make it sound more interesting.

Next it will be "See what crazy change to solar made energy purchasers sit up pay attention!"

But can it be improved with a "just?"

"See what crazy change to solar just made energy purchasers sit up and pay attention!"

You clearly have a fantastically lucrative career in annoying-headline-writing ahead of you.

I'm trying to validate my product. Would you pay me $5/day for an annoying headline?

"10 Crazy ways to validate your product for free that startup gurus won't tell you about!"

PS: I don't know what the 10 ways are, I just write headlines.

7's the key number here. Think about it. 7-Elevens. 7 dwarves. 7, man, that's the number. 7 chipmunks twirlin' on a branch, eatin' lots of sunflowers on my uncle's ranch. You know that old children's tale from the sea. It's like you're dreamin' about Gorgonzola cheese when it's clearly Brie time, baby. Step into my office.

"You won't believe these 3 changes that just made energy purchasers sit up and pay attention!"

"3 crazy changes made local [your town here] mom save 50% on solar panels in just 16 short months. What happens next is incredible"

The big secret to solar costs utility companies don't want you to know

"Read these 3 tips to boost your solar efficiency! Energy companies hate them!"

> Next it will be "See what crazy change to solar made energy purchasers sit up pay attention!"

That is _much_ worse, and I refuse to click on any link with that sort of headline because it's guaranteed to be more ads than content.

At least with the original headline I have an idea the topic is solar, and the news is the price falling significantly. Honestly I don't see the problem with the original headline.

"18 developments that just changed solar power forever. You won't believe number 6"

Oh good, we can whine about this instead of talking about the issue at hand. This is HN constantly now, the top comment is some nitpick more or less totally unrelated to the topic.

Sorry. :)

I didn't intend it to become the top comment. I just finally snapped and had to express my annoyance.

I guess I tapped into a lot of pent-up demand for the same thing.

Isn't that how conversations work though? At least, I know most of mine work that way. Oh, hey! That reminds me of something sort of related...

I came in here to complain about this same thing. Just implies a timeline much shorter than 16 mos.

That depends on the timeline you're comparing it to. If previously prices dropped 50% over 10 years*, then 16 months seems pretty damn fast.

(I have no idea what historical prices of solar panels were)

Yeah, I hate it. Vote with your clicks and never touch those headlines.

Another bait-word is "quietly":

https://hn.algolia.com/?query=quietly&sort=byPopularity&pref...

Really gives you the impression that Facebook deprecated their API's official Python bindings in order to be evil. Otherwise, they would have formally alerted the press.

"X just quietly did Y" is a thing, even:

https://hn.algolia.com/?query=just%20quietly&sort=byPopulari...

Is "just" synonymous with "recently?" I wouldn't object to that adjective being in a headline.

This article is making a really big deal out of bids. While the trend is encouraging, let's wait and see if the winning bidders can actually deliver at the prices they bid before getting too excited.

Hard to tell for a while as these tend to be 20 year contracts.

I think that's part of the reason the bids are so cheap, though. They're probably counting on some cost reductions over time so that even if they lose some money up front, the long-term profitability will be there. I doubt that anyone can actually deliver solar power at a profit today for the bid prices listed.

It's some factor of both things are cheaper now and things will be cheaper in the future. I'm betting these companies know what they are bidding for and it's likely technology will continue to make incremental improvements in this area. Compound interest works well here too and even modest decreases in costs compounded over 20 years will be very worthwhile.

Given that the vast majority of solar costs are upfront, and that the lifetime of a solar install is greater than 20 years, how would future cost reductions help with a project that's starting soon?

In this case:

>DEWA invited developers to submit bids for configurations made up of three sub-phases: a mandatory 200MW to be commissioned in April 2018, and another two optional 300MW tranches in 2019 and 2020, respectively,” the firm said in an analysis of the results.

so it's not being built for 2 or 3 years and they are probably hoping costs will continue dropping during that period.

The details of the situation are quite complicated, more details here http://www.apricum-group.com/dubai-shatters-records-cost-sol...

As far as energy goes, that's still very near term. But costs will continue to drop in that time period, without a doubt. Perhaps as important, they're hoping that interest rates remain low for the next few years.

Don't see why they would need to hope that interest rates remain low. Interest rates are already low, so they can sell debt at current interest rates for the term needed. I do think you're correct that low interest rates are a factor.

An unusual feature in this case is

>One can suspect that Masdar had access to long-term financing through the wealthy emirate of Abu Dhabi that no commercial banks, the primary source of capital for the other bidders, could match in cost.

Bingo. They're being subsidized by a government with access to cheap funds, and in Abu Dhabi's case, a lot of oil wealth.

In contrast the unsubsidized bids are much higher

Actually I don't think it matters if they deliver at that price or not, just as long as the infrastructure gets built. Just like the companies that built the transnational railroad went bankrupt. That's the boom, bust cycle at work, for good at least this time.

Yeah, the headline is essentially false.

Agreed.

Now, I actually DO think they can deliver at the prices. But that doesn't mean solar prices dropped by 50%.

Imagine this: you've got a business opportunity for a 20 year contract. Currently it costs you $10 to run per year, but that will drop to $6 after a few years, and drop further to $1 per year in the last 10 years.

Where will it be priced? Well if I said say $5, then most would agree that makes sense. After all, your average cost will probably be something like $3 a year, so locking in the rate at $5 means you're making a profit. In fact, you'd expect others to outbid you until the price approaches the average cost of $3. But let's say it ended up priced at $5... well a journalist might say 'prices dropped by 50% this year'. When in reality, prices will drop over the next TWENTY years, and 20-year contracts reflect that expectation. Solar prices today are still $10 today, not $5.

Of course these are just made up numbers. Point is, even if companies can deliver at this pricing, it's mostly a reflection of expectations of future prices, not today's prices.

A really interesting thing about this is that the price of solar panels has changed almost not at all in those 16 months: http://www.solarserver.com/service/pvx-spot-market-price-ind... shows that it's 0.49 to 0.63 € / Wp today, while 16 months earlier, it was 0.45 to 0.62. This is a dramatic contrast from the continuous 36% per year reductions from 2009 to 2012.

In large part because it's night half of the time, solar has a pretty low capacity factor, like in the 20% range (see https://en.wikipedia.org/wiki/Capacity_factor for details) so it matters whether this is 800MW peak or 800MW average. I think it's peak, which means that we're talking about something in the range of US$400M to US$500M worth of solar panels at current prices — which are the same prices as in 2014, when bids were twice as high! With a 35% capacity factor (Dubai is equatorial and sunny, although even Arizona only gets 19%), this project will have only 800 MW * 35% * $ 0.0299/kWh = US$73.4M/year of revenue, which is only a 16% return on investment — or ⅓ that, at 5⅓%, if we assume that the non-module costs of the project amount to ⅔ of the total cost, as shown in the bargraph on the article.

So, is the winning bidder (strangely, not named in the article!) really willing to accept a 5⅓% IRR for this investment, because PV solar park competition is really that cutthroat? Or are they betting that by the time they have to buy the modules, the prices will have fallen (returning to their former exponential decline?), and/or that the notorious "soft costs" that eat up half the project cost are becoming cheaper?

There's no real floor on the cost of silicon photovoltaic modules, since almost all of the cost of producing them from raw materials is energy, not the materials themselves.

It seems part of the story was crystal production getting ahead of demand.

https://en.wikipedia.org/wiki/Polycrystalline_silicon#Capaci...

The price graph a little lower is interesting.

Thank you! I remember that catastrophic price spike. Note that in the 2009 to 2012 timeframe, though, the polysilicon price was relatively stable (declining only by half), and it's declined since then, so polysilicon pricing is only part of the story.

And here in the USA some states are punishing solar customers who sell their energy, by taxing them on infrastructure costs, to protect the big energy companies. Their reasoning for taxing them is to "maintain the lines and equipment". The counter-argument to that is, "customers who consume pay taxes and fee's to maintain the lines, and on top of that, the government is giving them tax breaks to help "maintain the lines"

i get mad even thinking about it.

Same with internet, Cable, TV. The lawmakers will always try and mitigate the disruption, but all they are doing is delaying the inevitable.

Which states do you think have the worst solar laws?

The solution to this is to bill people separately for fixed transmission & distribution infrastructure, capacity, and electricity used. Ideally electricity used and fed back into the grid would both be constantly re-priced as well to reflect supply and demand.

FYI - most regional utilities in the US are publicly owned, not private, so I'm not sure who "the big energy companies" are.

My gf is an electromechanical engineer at a solar power startup (and obviously supportive of solar power initiatives).

Just asked her about this, and she said that: 1) the electrical grid wasn't designed for transferring power this way, and it can damage the grid 2) because solar power isn't a constant power source (say, a cloud blocks the sun for a minute), power companies need to keep power available for someone who's using solar. The amount of this is dictated by their peak power usage. May not seem like a big thing, but as more and more people switch to solar, they suddenly need to hold massive amounts of power, as disruptions can affect people in entire regions.

Then she started getting heavy into the physics of reactive power and my brain stopped working T_T

Anyways, there's a reason that they're charging fees for solar usage. You're using their electrical grid, and it costs money to maintain it and improve it to handle some of the new challenges of solar power.

Legislation around blocking non-profit internet and cable is just evil though :\

Good thing Tesla is making huge battery packs for our homes so we can ditch the grid entirely.

You don't need to wait for Tesla, you can buy Lithium battery packs now. Heck even AGM or wet cell batteries work fine. I have about 800 ampH and I can do pretty much anything I want except run an AC off of it.

How much did it run?

Batteries were about $650.

I think it will never be the case that you can run a household solar/battery plant for less than a utility can do it on massive scale and just run a wire to your house (remember to factor in depreciation on all your household kit, batteries and inverters don't last forever).

I think this applies more on the battery side than the solar side. There are certain options for storage that are totally impractical for home use. For example, vanadium redox batteries [1] are so bulky that you probably don't want to put them in expensive residential real estate, but they're pretty cheap and effective.

But a mix of residential solar and utility-managed batteries could be viable; it's not clear to me that the economies of scale for large solar installations are very strong.

[1] https://en.wikipedia.org/wiki/Vanadium_redox_battery

I think this is true too, but it depends on how efficiently the utility company runs their business, and how much profit margin they are allowed to extract.

Utility companies aren't competing directly with each other for the lowest price, so in practice there could be a lot of places where, while less efficient, it's cheaper for home owners to have their own means of power production.

I wish more engineering work would be performed on different chemistries in redox flow batteries. I'd rather spend the capital up front for a much longer-lasting redox flow battery (they are way, way bigger than other batteries, but that's not a concern when you are working with building sites and are willing to put the battery bank underground) than a lithium battery.

Solar power REDUCES peak grid usage; it does NOT increase it.

When do you think solar power is producing the most electricity? In the afternoon on a hot summer day.

When do you think peak grid electricity usage peaks? In the afternoon on a hot summer day!

Solar power helps get rid of the peak electricity usage problem. If anything, power companies should be paying solar users even more, because they are reducing costs for the power company, not increasing them.

Why does grid electricity usage peak on hot summer afternoons? If it's because of air conditioning, it's probably not universal.

I imagine hot summer afternoons are a time when factories operate below capacity (or not at all), and people heat their homes less and spend more time outside away from TV, etc.

Certainly not universal. Could be true in California or Texas, possibly. For sure it's not here.

Where I live, the peak is a winter morning which is windless and therefore particularly cold, at 8:00 (before sunrise). Solar output is zero, wind power output is zero. Everyone turns extra heaters on, puts the kettle on to make a hot cup before taking a warm shower.

The point isn't that it is 100% universal for all places. The point is that it is true for most places.

[citation needed]

It's creating new peaks at previously non-peak times.

We don't know precisely what effect that will have on the grid utility business, or what effect that will have on overall grid supply price rates. One could argue that grid power should get cheaper... one could argue that there would be a net canceling effect among all the factors involved... or one could much more reasonably say that it's a chaotic system so no outcome is guaranteed.

Disruption!

It reduces peak grid usage on average. But you still need replacement gas plants on standby ready to start up when clouds go over for 20 minutes on a hot day. So you save money on not burning as much natural gas, but it doesn't reduce the amount of peaker plants you need to have.

I'd be all in favor of having solar power sell at the going rate that utilities are paying. But that's not how it works. And that's not how solar advocates want it to work.

While solar and wind reduce peak demand, they have problems where they can suddenly loose a significant fraction of their output capacity (lull in wind, clouds) and that capacity has to be filled in by traditional peaking power plants, otherwise the grid will fail. Also the amount of power generated is not very predictable[1], and peaking/load following plants are needed to remain in standby to cover the shortfalls as the base load plants can take quite a while to respond to shortages in the supply of power.

[1]: https://www.ise.fraunhofer.de/en/downloads-englisch/pdf-file...

It goes both ways. Widespread grid-tied distributed generation can save on distribution equipment maintenance wear and tear further upstream. Neither side has honestly acknowledged or studied the trade offs.

Their reasoning for taxing them is to "maintain the lines and equipment".

That is a very valid reason. Solar power - like wind - is erratic in nature and has much higher requirements for the power transmission network than e.g. hydroelectric, nuclear of fossil power.

The erratic nature is even worsened by subsidies which encourage people to peak production, regardless of consumption. The way these subsidies have been implemented varies across countries, but wherever you have them, you are also inviting trouble to the power grid.

That is a valid reason while they can get away with it. That won't be the case for long. As soon as the storage costs follow the panels', the grid at the current cost will be a very hard sell. Of course, providing a good location, etc.

The infrastructure belongs to the utility. Why do you feel entitled to use it for free?

It would be like demanding free Internet because you run a website lots of people visit so your upload is greater than your download.

Oh boo hoo.

In my state, we are not allowed to tie into the grid at all.

> The counter-argument to that is, "customers who consume pay taxes and fee's to maintain the lines

It's not consumption anymore, but usage. You are using the grid infrastructure you should be required to help maintain it. It was just never an issue before now. Everyone uses the grid, the community needs to help maintain it.

In most places, power companies pay to build and maintain the grid, not the government with taxes.

A side effect of this, large scale grid solar is now significantly cheaper than rooftop solar due to labor costs.

At which point would it be financially beneficial for a farmer to turn a field into a solar farm rather than plant a crop? I have no knowledge in economics of either so I couldn't even estimate.

I think you get fined if you do that.

Where? Even if this was true, surely it would depend on where you live, yeah? Country and local laws would vary?

The questions was what it would cost a farmer, not farmer in place where it's obviously illegal?

What...

Just for the sake of trivial knowledge (your comment is obviously correct that it varies) it is actually forbidden in Sardinia (Italy) to replace farmland with solar power fields.

You are only allowed to setup photovoltaic panels if you have plants below them (asparagus and some flowers grow fine, apparently).

I have no idea why.

Care to explain? Because unless you're arguing along the lines of something something farm subsidies, I'm pretty sure you're wrong.

Usually farmland is zoned only for farmland use. You need an inspector to approve any building, and it must be related to farm use.

In Oregon, here's the list of allowed uses of farmland: http://www.oregonlaws.org/ors/215.213

You could probably install solar panels for the purpose of powering your house and farm equipment, but you couldn't install solar panels everywhere and sell the electricity to the public:

"Utility facilities necessary for public service, including wetland waste treatment systems but not including commercial facilities for the purpose of generating electrical power for public use by sale or transmission towers over 200 feet in height."

It's not just a local thing: Maybe there are places where it doesn't hold, but the government wants to ensure the US isn't dependent on other countries for food. So it puts restrictions on the farmland to ensure that there's always enough food available.

OTOH, if by 'farmland', you meant 'desert in Nevada', I can't imagine anyone would care if you bought it up and installed panels there.

Thanks. It's been so long since I've lived in farm land that I forgot about "let's not turn farm land into subdivisions" zoning.

On a related note, an agricultural high school near me has a field dedicated to solar panels, that powers most of the school buildings. The students are learning how to farm photons alongside corn.

http://solarbuildermag.com/news/church-farm-school-in-pennsy...

I think the economics of food production will probably trounce that of power production. In any event, it's more efficient to stick solar panels in the desert and wire electricity to places that are less sunny.

The Gulf states are the most polluting per capita on the planet, so great planetary benefit can be derived even just by using the power where it's generated.

Diminishing returns mean you end up covering deserts with solar before farm land. Next, highly marginal farm land.

On the other hand, wind farms have a tiny footprint so that's already a major thing in some areas.

RE: Windfarms

This has been a dramatic change in the US midwest landscape over the last decade. When driving through Iowa or Kansas these days, the horizon is constantly dotted with wind turbines nestled in amongst the corn fields or livestock pastures. 15 years ago this was NOT the case.

Yup. You can even see it from the air. With ever-increasing turbine sizes, these things are easily visible from 39,000 ft.

I don't see a way to link it directly but the layers on this map can be adjusted to show the many wind and solar projects in the US:

http://www.eia.gov/state/maps.cfm

There's a lot of farmland and ranch land in the US that shouldn't be farmland or ranch land. They're too dry, too hot, and competing for water resources with people and natural (sometimes endangered) ecosystems.

So, maybe it's something that should be encouraged; the food those farms and ranches produce would need to be replaced by food grown in more appropriate climates, and we'd need to rethink our recent "local food" movement, in some regards, but agriculture, and particularly animal agriculture, are an ecological disaster almost everywhere they exist. Couple that with limited water resources (where a lot of agriculture takes place in California, Texas, Arizona, and New Mexico) and you've got a recipe for serious problems long-term.

That said, agriculture could also shift. Less water-intensive foods, more foods that are appropriate for the area they're being consumed in.

Anyway, I think solar farms replacing agricultural farms could be a net win for the environment, even before considering the improvements that come from turning off coal-fired plants.

Hah! Only if dictatorship could ordain things to be done so correctly. Unfortunately we live in a capitalistic democracy.

Where do you live? How come your goverment isn't able to control taxation, or its regulatory environment?

Are you sincere in your belief that only a dictatorship could lead to more environmentally responsible agriculture and land use in the US? It seems like trolling, but if you're sincere, I could point you to some references on how our current laws reward irresponsible water and land use in many cases. There are many things a "capitalistic democracy" (if that's really what we are living in, which I also think is debatable) can do, and many things that are already being done, to guide how land owners utilize their land. The unintended consequences of current agricultural and water-use law in places like some parts of California, which have experienced more years of drought than years of normal rainfall for more than a decade, have been pretty significant. Government at local, state, and federal levels, have helped create the problems I'm talking about, so why shouldn't they be able to help alleviate them?

Presumably those laws were put in place because somebody benefits from them. Possibly somebody who makes campaign donations.

In that case, the government may technically be able to solve the problem in a way that's better for everyone, but not willing to, as the politicians who make the change could lose their campaign donations or their seats.

For farms that are too hot, a possibility might be that they'd be able to alternate crops with solar panels, and it would shorten the day's sun when the crops are in the shadow of the panels.

Solar panels might get in the way of them using their farm equipment if they're close together.

If you completely ignore repairing and paying for the automation you hypothetically could build a farm where the solar panels were on arms that would pull them out of the way of the tractors/combines or whatever.

I wonder if the weight of solar panels would prevent them being mounted on a wheeled device like the rolling irrigation systems used on many farms? Those are pretty robust and don't break frequently or require much maintenance; in the case of solar panels, they wouldn't even need to move frequently (so no need for permanent motors on them; you could just hook them to tractors or trucks and tow them out of the way). Though, there would need to be a lot more of them, and moving a bunch of them for harvest time or other stuff that required them out of the way would take a lot of time.

Not a serious problem: Europeans already invented extra-narrow tractors for vineyards. You'd be amazed how much machinery they can drive between rows of plants that appear to be tightly packed. Or you can install the panels on tall stilts and drive under.

My understanding is that transportation is actually a small factor in total food emissions. It seems that promoting "local food" without paying attention to whether that food can be optimally produced locally, might be more environmentally unfriendly than simply producing it wherever it is most efficient to produce and then transporting it.

For rail or ship delivery especially, yes. For trucks, somewhat less so, and for air, generally not.

Ships and rail both favour crops which store well (grains) or can be shipped frozen or refrigerated. For fresh fruit and vegetables, time is critical, and you generally want to be on store shelves within at most a few days. That's where trade-offs between location, farming costs (particularly for greenhoused or hydroponic farming) vs. transport start to get factored in. There are reasons why a generation ago you simply didn't have fresh produce out of season.

Disagree with agriculture being a disaster everywhere. Here in the midwest (Michigan, in my case) we get so much rain that there's rarely, if ever a need to artificially irrigate. Personally, the land that my horse pastures are on is so good that I threw seed on it and it just started growing. I do put a little bit of fertilizer down every few years, but mostly to replace the nutrients that are removed (baling, etc. will eventually deplete the land if you don't). Stuff grows here with very little encouragement.

Well the farmer doing it himself wouldn't be financially attractive (too big setup costs). But if the farmer is the land owner then he could rent it out to a power business that are good for the upfront costs. The exact point that would happen is when all the cheaper (non-arable) available land is already covered. That might have already happened in specific locations and countries.

Note that at the moment upfront costs (the panels) are so expensive it will be a long time before solar panel 'fields' would become any significant fraction of total arable land. I.E. a simple few acre farm field might be worth a couple hundred thousand euros, but totally filling it with panels might cost billions.

Or do both! Grow mushrooms under the panels.

Raise panels up a bit and can graze animals underneath them too.

Cows would tear them up pretty quickly by rubbing up against them. Not saying they couldn't be re-enforced but I just wouldn't stick em out in a field with livestock.

The grass under/behind the panels would grow using what light source? I have a hard time growing grass under some shade trees that are far from opaque and along a [solid, south-facing] fence line.

In arid regions with a low crop per acre yield it's beneficial right now. If the farmer has the money to finance it by himself it's almost certainly beneficial. But ofcourse it's better to just put them on your roof. In Germany and The Netherlands most farmers have solar panels on their (quite large) barns.

This is a common mistake that people make, especially when talking about fancy, flashy technologies, like drive way solar panels, road solar panels, ect

We do not have a shortage of land or places to put solar panels. Land is cheap, cheap, cheap compared to the other costs of solar panels.

There is no need to come up with fancy schemes to convert roads or windows or farms or whatever to solar panels. We aren't running out of land for them any time soon.

Farmland is already being converted, with predictable NIMBY reactions:

http://watchdog.org/191942/critics-want-sunshine-huge-mn-sol...

http://www.startribune.com/big-solar-parks-proposed-for-minn...

Including "prime" farmland:

http://www.mprnews.org/story/2016/02/03/opponents-want-minne...

Why can't large scale solar be combined with wind power to get double he energy output from the same land?

Well large corp/utilities need to grab it now because if endpoint arbitraging becomes widespread, that will be a serious threat to the old utility model.

It's time to get most air conditioning load onto solar. In the US, areas south of 37° (central California across to everything south of Virginia) should have enough local solar power to drive daytime air conditioning. For that, we don't need storage, we don't need to feed much power back into the grid, and air conditioning is the big residential load. 21% of electricity consumption in the South is for air conditioning. This is a no-brainer right now.

Here's an application for "smart power" technology. When a cloud comes over and blocks the sun, air conditioner compressors should shut down temporarily. If the cloud cover remains, start up again, on a somewhat random time delay, to give generators time to respond. (This will probably be implemented with some overly complex system that involves "the cloud", rather than being done by a simple broadcast signal.)

How much of these low bids in Dubai are due to the low cost of labor there? Also I am guessing that various building regulations are significantly cheaper to meet than in the US. I remember reading about the huge building boom in Dubai being possible because of large groups of extremely low paid laborers. I'd guess any other utility project in Dubai would benefit from this as well.

That isn't to say that there aren't improvements in solar cost. There are improvements. I just wouldn't compare a bid in Texas to one in Dubai.

If the price of solar continues to drop rapidly, why would anyone buy solar? Waiting a couple years for another 50% price drop seems like an obvious choice while we're still in the $5k-10k range to outfit a home.

Presumably people buying solar now are comparing it to the other available options rather than future solar.

Isn't it only dropping because people are buying it? If no one was buying it, it'd get more expensive. Also, a 50% drop this year doesn't guarantee a 50% drop next year. And perhaps there's some speculation that traditional energy sources are going to increase in price going forwards.

Also, I think for a lot of buyers there's more to the purchase than cost. A lot of organisations have environmental targets to hit nowadays, solar is one way to realise these targets.

And as another commenter mentioned, some people buying might not have a choice (not having electricity isn't an option).

Some of the costs are not going to come down much more. Installation labour, roof panel frames, inverter etc. etc. can come down a little but not by much.

https://electrek.files.wordpress.com/2016/05/chart.jpeg?w=77...

The price curve has to start flattening out soon! (I hope it doesn't, but I can't see how you can carry on achieving 50% price drops so rapidly...)

If efficiency went up, installation can come down...

People need power now and are not willing wait 5 years. So, someone is going to buy additional power generation now. In which case it's a question of current solar prices vs. (coal, nuclear, etc.) not future solar prices vs current solar pirces.

Do you mean the generated power, or the generation hardware? If it's the cheapest energy source available in a market where you have the freedom to choose your supplier, it's a no-brainer.

sure, this is what they teach you in econ 101 about deflation, but in reality, people buy things with utility even if they're getting cheaper (computers, cars, electronics, etc.)

People are buying solar today because it's already cheaper than buying grid electricity in a few places. Why wait for another price drop while paying the electric company even more?

This is only an issue if you don't NEED the energy NOW. People need it now and they have to get it from somewhere. It doesn't matter what it will cost if you have to have it now. All that matters is what your options are today.

"One can suspect that Masdar had access to long-term financing through the wealthy emirate of Abu Dhabi that no commercial banks, the primary source of capital for the other bidders, could match in cost."

I was excited by this headline until I read the article. This price drop is the result of advances in financial - not technical - engineering. It means nothing for the cost of solar outside of this specific deal, as below-market interest rates are just more subsidies. This is yet another eco-clickbait headline.

There is a nuanced economic issue related to this priced drop.

Today, (and for some time in the past) solar panels can be an investment, that is paid off by the amount that is saved by not having to use the grid (for example.)

So a homeowner might calculate that by investing $20,000 in solar panelling today, they can have a 100% return within 72 months (6 years). It's free if they manage to use it for 6 years. Afterward the fact that this paneling is installed is "profit" - they get the ongoing money from their savings.

So they are motivated by self-interest to make this investment, even if they assign "$0" to how much it's worth to them to reduce their carbon footprint on the planet; they don't have to care.

But look at what happens if they consider that the investment price will drop by 50% in the next 18 months. Then they will have a 100% return in 36 months, plus the 18 months they wait means their investment is repaid in 54 instead of 72 months. Or, perhaps, they can install twice the paneling in 18 months. Either way their ROI is better.

So that means for the next 18 months they are simply continuing to use the grid, which might have a higher carbon footprint. This might, paradoxically, drop adoption of solar paneling today (depending on people's expectation of the price change in the future.)

So then you consider that others are logical actors, and will follow to the same conclusion; meaning that the price won't drop in 18 months and is therefore the proper investment now.

But then you think that others will think this too, so then you should wait.

And then you remember that you should never go in against a Sicilian when death is on the line.

Curious… does it ever get low enough that electric heat becomes desirable? We moved into a place that had electric heat on the ground floor, ran it the first cold month, saw the bill, then made it a purely "on demand" heating solution. The rest of the apartment was gas forced hot air, which was on a normal schedule.

To heat a whole home in a Boston winter seems like it might cost $1000 or so. Is it reasonable to expect rooftop solar to ever generate that much electricity?

Three issues - in the winter the days are shorter, the weather is cloudy and it's cold at night. So maybe you could do something with storage heaters, but I'm not feeling optimistic.

Boston is not the best place to generate solar PV energy. Nor is it a good place to live in a suburban style (town)house, considering how much more efficient condos are in terms of heating and efficiency.

When you start with one of the worst possible use cases of solar, you can't expect great results.

Electric heating is great for individual rooms, not for whole house heating.

An air source heat pump might make more sense than just using the electricity (they often provide 3 units of heat for each unit of electricity, a COP of 3 compared to 1 for resistive heating). It depends on how much summer power could be sold for and how much all the things cost.

Newer ones would work fine for most of the Boston winter.

In places that cold, the gist I get from reading about heating/cooling is you are better off bringing down your air changes per hour [1] (a function of how airtight your residence is), then insulating (including nearly eliminating all thermal bridges), then passive heating, then active heating, in that order.

I've read field reports of people with measured air changes per hour that meet the PassivHaus standard, with 60+ R-value insulation (again, PassivHaus standard), isolated the foundation with insulation, consolidated all possible thermal bridges into a single, small conduit, and heat input from passive solar concentrator, enjoying NE US winters with only double-digit gas/electric bills for active heating in the worst months. With a rocket stove, most could avoid even that nominal amount and take care of burning their brush pile at the same time.

The insulation will cost you upfront, though. Corning FOAMGLAS is my favorite at the moment because it doesn't involve greenhouse gases during its manufacture, but it and its installation can easily add 15% to your overall build cost. Use EPS (looks like giant styrofoam blocks roughly the size of 3 feet thick doorways, wish all the styrofoam we throw away into landfills could somehow be recycled into these) instead, and you still are looking at around a 10% upcharge. Granted, you're hovering around 70'ish R-value with that much, and thermal changes take a much longer time compared to conventional residences.

[1] https://en.wikipedia.org/wiki/Air_changes_per_hour

In some states, the utilities don't let you sell back I think (Florida being one. we have a super friendly power lobby here. /sarcasm). But I am curious about the cost and hurricane proofing of a set of panels + battery backup. My parents would totally buy a combo for their house if they knew it wouldn't get ripped off in a storm.

Pretty impressive. They need to work on cheaper batteries now.

Those prices are dropping drastically too as manufacturers have been opening manufacturing facilities and the technology continues to improve.

Batteries would be great but they are not necessary unless you want to replace all generation with solar which would be a gargantuan undertaking. As part of the current generation stack, even at expanded scale, solar works very well without storage.

Yup. There's no reason why we can't rely on peaker plants a little bit longer. In general, there's a ton of power-plants designed to turn on and off throughout the day to inject power into the grid when demand grows.

The chief benefit however, is that this happened starting at daytime hours (when workers come into factories and tons of energy is suddenly demanded from the grid). However, because 12:00 noon is peak solar, peaker-plants will shift to later in the day to 3:00pm to 5:00pm or so (as opposed to running from 12:00 to 7:00 each day, they'll maybe run 3:00 to 7:00 each day).

Peaker Plants can be Hydro or Natural Gas. Natural Gas Peaker Plants are the most expensive, and they currently happen to run during a similar timeframe as solar.

For now, Peaker Plants can remain the solution. We need something to work on cloudy / rainy days after all. And "battery" tech is getting better.

http://www.aresnorthamerica.com/

> There's no reason why we can't rely on peaker plants a little bit longer.

No reason other than them being more expensive than batteries:

http://www.bloomberg.com/news/articles/2015-12-22/batteries-...

>We need something to work on cloudy / rainy days after all.

Even without storage, interconnecting grids with HVDC across the US (or across a continent) solves this problem really really nicely. China is already building tons of HVDC to do this, and we need to as well. Long haul transport over HVDC is also cheaper than peaker plants.

That said, natural gas peaker plants stick around as long as the fuel costs are low, and the capital has already been sunk into the plant. But for new capacity, I think there's going to be a huge shift towards storage.

100% solar isn't the only scenario where a battery in the home would be useful. Even today, one could install a battery with an intelligent monitor that charges during non-peak hours and discharges during peak hours, effectively arbitraging the price of power. I have no clue if this actually makes sense economically, however.

You can also just change the definition of off-peak electricity.

The coal grid already provides cheaper electricity at different times of day, because it's not efficient to turn coal plants on and off. Right now that cheaper electricity is at night, because most electricity consumers consume during the daylight hours. So if you need a boatload of electricity and aren't too sensitive about the time, you can shift you consumption to the off-peak hours and save some money.

But if you're not time-sensitive in your consumption, you can shift to the sunny daylight hours, when solar power is available. And if you're really not time-sensitive in your consumption, you can even shift consumption from cloudy days to sunny days.

As ebbv points out, they are dropping really fast in price.

There's a fairly decent analysis from Lazard consulting on storage:

https://www.lazard.com/perspective/levelized-cost-of-storage...

It used to be part of their cost of energy analysis, but has recently been broken out:

https://www.lazard.com/perspective/levelized-cost-of-energy-...

But since these report aggregate information from previous years, they always feel out of date compared to watching the latest news.

Ramez Naam's forecasts are the most informed forecasts that I have found:

http://rameznaam.com/2015/10/14/how-cheap-can-energy-storage...

or maybe an efficient way to convert electricity to hydrogen and then use it in a fuel cell when needed

I hate these stupid work hours anyway that create this stupid habit of burning energy when it is not "naturally available".

Couldn't changing the business hour according to the sun and wind be the real cost killer?

No technologies, no investments involved, it just requires one smart boss, some smart accountant and employees.

Imagine it: people would have no way to avoid raising their kids during the down season, we could fire teacher, single could do art, we could stop funding culture and it would be popular culture, maybe science, less working hours, but more people would have to work.

It would solve quite a few problem.

Pretty trivial remark, but when the prices are so low, leading to most prices have two trailing zeros, couldn't we maybe switch for another unit than $/kWh ? Maybe $/MWh ? So we are currently at 29.9$/MWh.

For information, the average household in the world uses 3 MWh per year and a typical US one does a bit more than 10 MWh. Advanced and ecologically minded countries like Germany go down to 3 MWh.

Keep in mind that the location is important. Dubai has a lot of sun, you would not get this price with the same tech in, say, Canada.

This headline is beyond misleading. The reason this bid was so low that it is financed by a state owned company in Abu Dhabi.

The cost of capital is the most important thing on these projects. If you're getting below market capital financing then no shit, prices are going to fall a lot.

Unfortunately the price of solar hasn't dropped that much in California, and may take some time.

If you get a bid from a solar company they almost never give you the cost per watt (at least for the 5 companies I got bids from), but you should do that calculation yourself and then compare against the average in California to see if they are ripping you off:

https://www.californiasolarstatistics.ca.gov/

The price of raw cells are super cheap now and if you're willing to reearch, engineering and DIY, you can build great panels for even cheaper. As many large projects come online, both li-ion and solar are going to fall through the floor faster than Moore's Law for some time, and the slow down.

I suspect solar deployment will take the US by surprise, because of the compelling economics.

Hint: go long on SCTY

Solar remains a long-term choice, though.

I love the idea, but I'll have sold my current house before a suite of solar panels pays for itself, and from my limited knowledge, the price of solar-equipped houses doesn't reflect the investment before it's paid for itself.

Disclosure: UK, we have no sunshine.

The idea of an always-on grid sized for peak demand is going to seem hopelessly anachronistic in just a few years. Third world power grids - frequent outages, sized for average load, cheap in every sense, barely regulated - are the future

I'm curious as to the reasons behind the drop, and if that has anything to do with solar being solar. Could the same thing have happened for wind or nuclear given certain social and political pressures and incentives to innovate and mass-produce?

Google Project Sunroof can tell you if you should invest in solar based on your roof area [0]

[0] https://www.google.com/get/sunroof

How can something "just drop" over 16 months? I think it's amazing that solar is becoming more affordable, but a year and a half is hardly sudden.

If you decide to go out of the grid almost completely, and buy batteries to store your energy. Have any idea about how much you'd spend?

Even with recent developments, being totally off-grid only makes sense when it's your only option (remote rural cabin, etc).

Solar panels with enough battery backup, plus an alternate generator (gas or diesel) for times when it's overcast for longer than your battery reserve are still going to have a very long payback time if utility power is an option.

There's a reason utilities exist, after all. It's always been possible to have your own electrical generator, it's just way more cost-efficient to do that at utility scale. That will likely continue to be the case with solar and batteries.

It still amazes me that here in silicon valley, no available electricity tariff reflects the timing of the supposed solar glut.

What about land cost? Do the cost stated there include land cost? What about in places where land is expensive?

Is this not just a symptom of oil prices dropping? Solar has to remain competitively priced or the industry is screwed

An entire industry can't just lower prices to meet a competitor.

Without subsidies an industry can't not just lower prices to meet a competitor.

Especially with the sort of auction pricing in energy markets. If the going rate for energy is 5 cents a KW*hour, then you can't sell it for 6 cents.

Solar survives off subsidies in the USA. Though in places like Dubai it might be a competitive energy provider.

No, solar installations have doubled every 2 years, which would be inline with the price dropping in half every 2 years, too.

http://cleantechnica.com/2014/07/22/exponential-growth-globa...

I'd guess that the profit margins were minimal before oil price drop, so lower demand for solar should not result in producers lowering their margins.

But perhaps the inputs for manufacturing solar energy are dependent on oil price (transportation etc.).

Natural gas maybe. Oil probably not since it is rarely used for electricity.

How low would it have dropped minus incentives/subsidies?

Without even reading comments: the naysayers are talking about peak demand when the sun is not shining. What they're missing: distributed, fault tolerant energy storage using eg Tesla powerwall.

And the world marches ahead of America

I cannot imagine utilities lobbying group not going whole hog to squash this.

The availability of solar power at night or on cloudy days just improved 0% in 16 months.

Saying that solar is okay because it's hooked up to the grid is not an answer, because that's just another instance of a reliable energy source (fossil fuels, nuclear, hydro) bailing out an unreliable one (solar, wind).

this is the same as the "electric cars are actually powered by coal!" argument. it seems like it ignores all side effects of an incremental improvement in pricing/availability of technology: proliferation of EVs leads to removal of internal-combustion cars (all point sources of pollution), in turn leading to lots of cars dependent on the grid for power, in turn leading to that cleaning up power plants instantly cleans up millions of cars.

by the same token, price reductions in solar power cost leads to battery storage systems (or other storage systems) being even more desirable and cost-competitive, in turn leading to them being installed in preference over other types of power plants.

I don't understand why this is a problem. Two things:

1) You're still using MUCH less overall fossil fuels. A 40% reduction in fossil fuel use would do wonders for the world economy and be a huge step forward in reducing emissions. 2) If other people are feeding power back into the grid, then you can be using their solar power. It's sunny somewhere, right?

That same argument could be used to advocate everyone running diesel generators at home 24/7 because of the power outages that occur on the grid.

Sure, coal and gas pickup the remaining tab, but even if they are covering half of the usage, that's better than all of it.

http://cleantechnica.com/2015/08/10/adding-energy-storage-to...

You can add a battery backup system to cover night-time usage on your own home. The $10k battery system basically doubles the price. But since the solar panel's price just dropped by 50%... Cloudy days you might still be in a deficit.

What is so wrong with a mixed system that uses renewables where it makes sense and relies on other sources to fill in whatever gaps appear?

It's interesting how no one is discussing how the governments massive subsidy of the solar and wind power industries are completely distorting the market for these "prices", so studies like these are pretty much nonsense.

Of course price/KW will drop massively if the entire thing is being propped up by taxpayer dollars and not the actual need to be profitable.

I guess I just need to resign myself to the idea that so many misguided people now believe that government can print and spend money on everything and that will always work forever.

But it won't.

Which government are you talking about? You realize this article is not about the United States?

For other energy sources what % of the prices at each level rely on some sort of government subsidy?

"Oil, coal and gas received more than four times the $120 billion paid out in incentives for renewables including wind, solar and biofuels"

source: http://www.bloomberg.com/news/articles/2014-11-12/fossil-fue...

However, those subsidies are not paid in the same geographical and political regions at all.

Sun and wind subsidies are paid out in places like EU countries, especially Germany, where they distort the market. Gasoline on the other hand is taxed highly.

Oil, coal and gas get subsidies in places like Venezuela, Saudi Arabia, Iran or Malaysia, where they distort the market.

That Venezuela distorts its markets in some way does not really make it a good idea to distort the market in Germany (or USA) in another way.

Fossil fuels have unpriced externalities even in places like Germany. And what you call market distortion re renewables in Germany is more appropriately called investment. The proof is the global solar industry that that country singlehandedly kickstarted with it's subsidies. A similar story with wind energy and Denmark.

> Of course price/KW will drop massively if the entire thing is being propped up by taxpayer dollars and not the actual need to be profitable.

If saving the world was free, the private sector would have done it already. It's not, so it needs to be subsidized.

I'm not against subsidizing solar as it is politically expedient, but a more direct and cost-efficient way to help the environment would be to tax carbon emissions and let the market figure out how to save the world.

But the cost of subsidies are spread out across all taxpayers, while carbon taxes mostly affect polluters, who will lobby against it.

I think you're right, but one option is politically easier than the other.

THe article says that in Dubai there are no subsidies

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