Solar PV rapidly becoming the cheapest option to generate electricity
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Solyndra is an early casualty, since their business model depended on PV panel prices to fall much more slowly.
The economics of home based solar electricity depends on three numbers, the panel price, the local retail electric rate, and the interest rate of the loan for the system. Right now, in much of the US, you can see that a PV system makes sense for new construction. A simple example:
$12500 : 4500 W PV system w/no storage (grid backed up)
4% interest rate, payment of $60/month
$0.11 per kwh avoided cost, the system generates about $70 of electricity/month
On the positive side, electricity prices will probably go up. On the negative side, the PV cells will likely deteriorate at a 0.5 to 1% rate[1]. At 0.5%/year, 30 years would be 86% original rating (not bad). At 1%/year, 30 years would be 74% original rating (still fairly effective).
[1] http://info.cat.org.uk/questions/pv/life-expectancy-solar-PV...
The utility bill savings more then compensate for the extra $60 in the monthly loan payment.
Most solar panels come with a 25 year warranty.
Edit: I'd love to put solar in my house. We have a rebate in my country as well, but I'm sure I can use the money better in the short term, and likely end up with a more efficient setup for less money if I wait. Until then, geyser blanket, install LED's in the most-used light fittings, install a small geyser under the kitchen sink so it doesn't draw the full pipe's water just to wash dishes.
When the paradigm is changing, investing is risky.
However, if you buy a system now and it's 10% cheaper in a year and you would have made say 3.5% on the investment [1] you'll be out 13.5% minus your electricity savings, and that's in 1 year. What about 4-5 years? Won't it be much cheaper then?
[1] I've made about 37% this year as a fairly active trader, so every cent means a margin of safety. No solar for me because I need the cash!
But when the costs converge this closely then small assumptions can tip the scale one way or the other - one % extra opportunity cost, a converter that needs replacing 5 years earlier, 10% less sunshine in one of the earlier years of the installation's lifespan, ... That said though, when you extrapolate costs of grid electricity of the last 10 years, and base your energy price scenario on that (instead of keeping up with inflation like I did), PV comes out ahead even when taking worst-case scenarios of all other variables.
Many people argue that because prices are falling so fast, it doesn't make sense to buy now. But IMO it's much more nuanced than that:
- As prices fall, so will subsidies. Already most subsidies are being phased out or decreased.
- There is a floor on the prices - in the short term that floor is just below grid parity, in the medium and longer term it will be production limits. I don't think it's rational to assume that prices will keep falling so fast.
Many words have been shed on this - I guess only time will tell. That said, like I posted elsewhere here, my parents are getting an ROI of 11% on their panels. That's mighty good for money that can be borrowed under mortgage, and 'green' == cheap mortgages for that matter. (that yield is only because of subsidies though, so it's not really a fair general case comparison).
Of course after a few years these situations will change and as more players enter the market (lured in by the high profits of the existing ones...), the downward trend will continue, without the anchoring to 'grid parity' that exists today.
How much of "rated power" does that warranty cover?
Suppose that the power output drops 20% by year 29, what will the warranty pay? How about if the output drops 15% by year 20?
It's unlikely that the warranty will pay full replacement value. Most warrantys cover pay value, which is likely to be fairly low for 20-30 year-old PV panels. And no, they won't fix if that costs more than the "value".
(Of course, this ignores the format differences; if sata goes out of style, it could actually cost me more to source a sata part. Of course, judging from how long PATA lasted in a largely backwards compatible format, I /probably/ wouldn't have to worry about that too much in the next 10 years, but it'd be a source of worry. I'd be much more comfortable promising you 2tb of storage of some type with some minimum performance level, and not specifying interface, or selling you network-accessible storage for the next ten years.)
Another huge problem with these calculations is the very small fraction of people who stay in one house for more than 10 years. Essentially you have to stay in the house for the entire payback period or you've lost out.
Personally I think the solar price will have to drop to the point where it is much lower than grid (with no subsidies), rather than just about equal. At that point, takeup will be much higher.
As far as moving goes, studies show that solar systems increase the value of a house by approximately the cost of the system. Of course, if solar system prices fall as expected, this premium would likely drop also.
And the economics are the same for a system where the cost is rolled into a loan during a home loan refinance, an option available to many people now.
Florida gets a lot of sun. I agree with you that a tracking array of new panels in Florida gives those numbers.
For people in other parts of the country and without trackers I find this site that has monthly solar radiation numbers to be useful for estimating output.
http://rredc.nrel.gov/solar/calculators/PVWATTS/version1/
Looking around I see that a 4500W system, no installation, no tracking, runs about $20,000.
http://www.infinigi.com/4500w-solar-grid-tie-system-20-sanyo...
http://www.sunelec.com/comparisons_of_grid_tie_systems_price...
Optimal tilt just refers to the tilt the panels are installed at, no tracking.
Total hardware costs are currently about $1.75 watt for panels, inverter and hardware. Fed Tax rebate is 30%.
The federal DOE site calculator for the same 4.5kWh fixed tilt plant gives 4580 kWh/yr for Portland (http://rredc.nrel.gov/solar/calculators/PVWATTS/version1/US/...), ranging from 142 kWh/mo in December to 578kWh/mo in July. What accounts for the discrepancy between the two calculations?
(I do think you're right about the confusion and exploitation of the difference between peak power and average power.)
5 hr * 4.5 kw * 30 days/month = 675 kwh/month
http://rredc.nrel.gov/solar/calculators/PVWATTS/version1/US/...
It might become reasonable in Seattle at some point, depending on the costs of installing a system with tracking. One should also factor in that peak output decreases over the life of the panels in figuring out lifetime cost/benefit, and not just look at output numbers from the first year.
It's important to establish what specific area we are talking about in these discussions and what particular sorts of systems we mean and their actual complete costs. Not everyone lives in Florida or Hawaii and my understanding is that tracking systems are quite rare and have their own issues. I've only seen one tracking system myself, it was at a school installation that was done in a field. I have not yet seen them on rooftop installs. There is little information about them but often estimates include numbers assuming tracking.
Given the rate solar PV panel prices are falling, however, PV in Seattle-type climates (and in Germany like the OP discusses) may be economic much sooner than many people expect.
This is not strictly correct, tracking does help as the numbers from the DOE calculator show. However, the cost of purchasing, installing, and maintaining a tracking system will cancel out some, or possibly all of the gain. How much so is not clear.
In this case, a 4500Wp fixed angle installation, which appears to be available for around $12,000 not including installation or installation brackets generates 4364kWh per year in Seattle, saving the homeowner $279.30 in annual electric costs given the alleged 6.4¢/kwH rate in Seattle (which seems very low to me). This is equivalent to a 2.3% return on the investment, with, unlike in savings, the principal is non-recoverable and expires after 25 years as the panels reach their end of life.
The numbers are better for other cities true. The DOE calculator gives 5491 kWh/yr for a 4500Wp fixed angle installation in Hawaii, with 18.1 cent electricity. Over a year, the electricity value is $993.87, an 8.2% annual return, but again, with the principle not returned and the investment expiring after 25 years.
The sad thing is that First Solar's thin film panels hit $1/watt a few years ago, but you are unable to buy them in the US due to Solar City getting an exclusive and deciding to only leasing them at nowhere $1/watt.
That's not how it works unfortunately. Most of the cost of a utility are fixed. If more people are using PV then the fixed cost get divided over a smaller number of kWh and the cost of the remaining non-PV kWh goes up. Since peak usage in most countries is when it's dark the utility will not be able to reduce its fixed cost until someone finds a way to store energy in an economical way. The utility will simply have to stop paying for electricity delivered back to the grid because they will no longer be able to afford it (the only reason they do that now is politically motivated).
Citation needed.
http://www.srpnet.com/prices/home/tou.aspx
Looks to me like most of the peak hours are when the sun's out; especially in the areas where PV panels work best.
http://www.thefreemanonline.org/columns/our-economic-past-th...
Course he didn't foresee the advent of the automobile. Breakthoughs like the horseless carriage come out of nowhere. Something like Thorium could end up generating ultra cheap electricity and in fifty years solar might end up being thought of as a quaint technology like buggy whips.
Our goal for the US should be energy independence, not a slavic devotion to a specific technology.
I'm thinking you mean:
http://www.thefreedictionary.com/slavish
rather than:
Solar is the ultimate option of energy independence, since as the OP discusses, 30 lbs of sand turned into solar cells will power a house for three decades or more.
Solar will likely be some part of the answer but it's always going to be niche relative to oil, coal, nuclear, and (where the region allows it) geothermal/hydroelectric.
The question that only experts in the space could answer is whether the $1.25 price per Watt is due to a real decrease in the price of fundamental components/manufacturing processes or whether it is due to subsidies of some kind.
[1] http://www.telegraph.co.uk/finance/comment/ambroseevans_prit...
[2] http://www.nytimes.com/2011/03/25/business/global/25chinasid...
The OP graph showed solar prices falling faster than linear on a log scale. Meanwhile, nuclear and coal plant construction costs are now two to three times what they were a few years ago.
Not sure where your confidence solar will be a niche player comes from when the pricing trends favor solar so dramatically.
There is no way around the fact that the sun doesn't shine 24 hours a day, and residential power usage peaks after dark.
In short, other types of large-scale generation will always outdo solar because it just cannot reliably provide power around the clock.
A bicycle is cheaper than a car by an order of magnitude, but can't carry passengers or luggage, can't go long distance, and isn't weatherproof. That's why nearly everyone with a bike also has a car, even despite the massive cost advantages to cycling.
First, however, residential usage does not peak after dark. Peaks occur on sunny hot days when A/C usage is maximum. And since in the US the electric grid already exists and no one is proposing dismantling it, that simplifies the problem.
Ten years in the future, iPad-level power consumption will rule for computing machinery at home (iPad == 2.5 watts). LED lights will be common. Solar panels will be the cheapest form of electricity, if current trends hold. Even on a cloudy day, solar PV generates significant power, so about the night?
Batteries, either connecting a city's worth of hybrid cars, dedicated battery packs, pumped water storage, compressed air storage, are all options. Others are to run natural gas generators at night, or wind or hydro or geothermal, all grid connected. None of these are particularly difficult to imagine, and combined with efficient lighting and other expected improvements in efficiency could easily be expected to cover residential night time load.
Adding battery packs significantly increase the cost of a system by an order of magnitude. These are all true but they do not factor cost into the equation. With any of these additions, solar will still be far more expensive than baseload grid power, and for most will still not negate the need for a grid connection.
All these technologies will be fantastic for remote areas to obtain a higher standard of living, but essentially have zero chance of displacing baseload grid power as the majority of power usage in urban areas.
The only way they will win out in the long run is with punitive taxation of large-scale power generation, which is essentially a political dead end for all those who try it.
It's great to be enthusiastic about solar power, I personally like solar technology and will buy when it makes sense to do so on it's own merit. But there are limitations that are very difficult to overcome.
The question raised was could solar PV supply a majority of residential electric load if it was basically unavailable at night.
In ten years, when the OP expects solar PV to be cheaper than all other forms of generation, how much power will really be needed at night?
I can easily imagine a house with very little night time consumption. Natural gas furnace, gas stove, gas water heater and dryer; nothing exotic. Refrigeration electric load can be shifted to the daytime by simply setting the controller to over-chill the freezer during the day.
That leaves computing devices, lighting, and entertainment for the night time electric load.
Maybe we can totally flip culture on its head by going to work when it's dark and enjoying the few hours of sunlight all to ourselves.
At current prices. Grid-scale batteries are expensive now because each is a unique specialty product. If we built sodium-sulfur batteries in the same volume as we build gasoline storage tanks, the price would decrease dramatically.
Efficiency gains also matter, because net system efficiency is a geometric process. Consider a 20% efficient solar cell and a 20% efficient battery: the system efficiency is a ghastly 4%. And that's not counting power conversion and transmission.
If the solar cell and battery were boosted to 40% efficiencies (physically possible), then the system efficiency would rise to 16%, a factor of 4 increase. That's halfway through the order of magnitude price problem you give.
Then there's heating and cooling efficiency. American buildings and refrigerators tend to have horrible insulation. In many localities, merely using proper insulation closes the rest of the price gap.
As a data point, I sized the batteries at my cabin to provide two days of power under total cloud (more than enough for getting to 24 hour solar power) and the batteries cost about half what the panels did.
(That discharges the batteries to 60% capacity. You also need to consider that the batteries will last about 6 years then get recycled. I mentioned AGM because they can charge much faster. If you are only interested in 24 power shifting, it might be cheaper since you'd need to buy more capacity in lead acid batteries to tolerate the charge rate. )
And I didn't either. I just said Solar will always remain niche because of the inherent characteristics of it. You can't make the sun shine 24 hours a day, day in, day out and create baseload power. You can add capacity and use storage, but you'll never be able to make it competitive as you do so, because your efficiency drops as you do. You can be passionate about solar, but you can't ignore the facts.
>Hydroelectric power provides a huge amount of baseload for some regions already.
Agreed. Hydro is a fantastic power source and should be expanded because it brings water supplies and electricity, two of the building blocks of civilisation. And this has nothing to do with solar.
>when load is much lower because industrial users use far more power
Large industrial users like aluminium smelting will run whenever the power is cheapest. If that means smelting at night, they will. Worker overtime is a fraction of the savings they will make through cheaper power Aluminium is literally congealed electricity. Again, nothing to do with solar, but I thought I would add it.
Bottom line ; solar will always remain niche, it will have an important part to play in sunny regions where it correlates well with power usage for cooling, but it will never displace baseload power generation by other means.
In the US, 2.5% of baseload power is pump-hydro. Most of this is probably powered by hydro electricity, but solar is working well in many places too.
Sure it does; we just need to blanket the planet in superconductors, and. . . .
Note I am not against government spending for basic research it has paid for itself time and time again.
If you consider solar to the "ultimate option" you're closing your mind to other ideas.
People have made fortunes betting against conventional wisdom.
What he's saying is that we've reached the point where we can generate renewable electricity. Now we only need to triple the output so that we can have our cars drive on it too, and that industry can run on solar power.
I don't understand how that works. What is the cost they use? For industries with steep learning curves, the right strategy would be to use expected future cost as the basis for business decisions, rather than the trailing average (realized) cost, in order to build the market and more quickly progress on the learning curve.
If that's illegal (it's often used in instances I mentioned above), then I feel like progress in industries with steep learning curves will be slower, because companies will be more timid, causing the market to grow less quickly.
What is everyone's opinions here?
[1] http://www.ibtimes.com/articles/234291/20111019/solarworld-s...
At best China will collapse a-la Russia under its own evil government, at worst this will help prop them up for many years to come.
Scary thought.
I'm not thanking any nation involved in such wholescale thought control. Let's not forget it's an evil nation, they're liberty and freedom hating bastards. This seems to be a lost thought recently in the capitalist land rush that's been going on the last decade.
Take the Amazon Fire, for example. They lose money on every unit sold but they don't care because they expect more sales in their real business: retail. How are companies who only make these devices (e.g. Apple) supposed to compete with that? What market are they supposed to use to makeup their losses. And how can they protect this other market from getting hit with the same thing?
Apple doesn't only make those devices: see iTunes and the App Store. Besides, one can argue that they do the same in their deal with AT&T (which cuts $100 from the iPad price).
But to answer your question, there is more to compete on than price; in fact, Apple knows that well, considering they've been selling Intel laptops with less bang per buck than other manufacturers, like HP and Dell, and still sells a lot.
The best rebuttal I've heard (to renewables generally, not PV specifically) is the second to last chapter of Matt Ridley's The Rational Optimist: http://www.rationaloptimist.com/books/rational-optimist-how-...
(Sorry I can't link directly to the content, but so far as I know, it's not available online in either case.)
The online course 'Physics for Future Presidents' taught me a lot about how to evaluate energy sources. I would recommend it to anyone interested in learning the physics concepts behind many hotly debated areas, whom currently has little knowledge or exposure in this area.
Summarized, Ridley argues here that the "renewable/non-renewable" distinction is quantitative (not qualitative), and that renewable energy harvesting devices are built from non-renewable materials.
Here's an audio interview with Ridley that might cover some of the same stuff in the book: http://www.econtalk.org/archives/2010/10/ridley_on_trade.htm...
Of course, maybe the declining supplies of fossil fuels will cause fossil fuel prices to rise. But what about advances that make the extraction and consumption of fossil fuels more efficient?
I'm just throwing these things out there because there's a lot of economic dynamics that could move targets like "grid parity" significantly.
Another assumption is that natural gas prices will stay the same, when actually they are going down right now.
Not an assumption but rather an omission: He uses a 25 year payback period for solar, but does not include opportunity cost of that money (i.e. how much that money would have brought in interest) over 25 years. Once you include that (and you should) it doesn't look as good. And in any case 25 years is far too long. 10 years is the standard for evaluating payback periods.
6% over 25 years is 4.5 time the base value. So the solar power actually costs 4.5 times as much as he assumes. Even assuming just 3% would give you 2.1 times your cost.
Edit: These calculations are a bit off since they assume paying for the standard power all at once at the end, but actually you make payments throughout.
I think you misread the 25 years as being a payback period.
Something is wrong here. Installation is maybe $3k. The typical retail markup is 2x. So, let's call it $5k.
25 years of 4,000kWH is 100,000kWH. $25K means $0.25/kWH, which seems high.
http://en.wikipedia.org/wiki/Electricity_pricing#Global_elec...
I'm in San Jose and my last electric bill was $107 (including taxes) for 587kWH. That's just over $0.18kWH.
I'm not on a life-line or time of use schedule. (That's a two family house.)
Why? My average is considerably less than yours.
Natural Gas prices took a dip because the energy demand curve took a dip in 2009 and most importantly, a relatively new source of of Natural Gas has been developed in North America, which had previously been a major importer. (http://ferc.gov/industries/gas/indus-act/lng.asp).
Most new power plants in North America and Europe are Combined Cycle Gas Turbines as the relatively low up-front investment, flexibility and (currently)low fuel costs make them the best solution. This should prevent Gas prices from dropping much further. When/if the economy picks back up, the increased demand should further solidify the price of gas.
Of course, if the energy supplied by wind and PV grows faster than the overall demand, then this will reduce the demand for Gas, thus keeping prices low.
In my area I expect to save .18 cents per year per peak watt.
Prices have been falling at 1-2 cents a week since june.
Except per panel is at least $300 and you need a bunch of them.
I guess the idea is also to avoid battery storage and just feed the grid.
Price comparison for grid-tie http://www.sunelec.com/comparisons_of_grid_tie_systems_price...
The main disadvantage of solar power is that it can't be used 24 hours a day, however besides the expensive batteries, solar power can be stored in other ways - for example, you can use every minute of idle time or free capacity to power compressors that pump air inside a few large tanks, and use that compressed air at night to power the generators.
Does anyone know the current approximate total cost (labor + material) in Northern CA? It was like $8-$10/W last I looked couple years ago. Also how easy is a DIY approach in installation?
Weird. Where I come from that is called economies of scale & learning curves are applicable only to the labour component.