Solar Parity

Post from Jeffrey Winters:

There’s an argument that the controversial issue of restricting carbon emissions from power plants will melt away once renewable energy sources can produce electricity as cheaply as existing generating stations. Already in the U.S., wind power is adding more net nameplate capacity than any other source of electricity aside from natural gas, according to data from the Energy Information Administration. That’s likely because land-based wind power is, after natural gas-powered turbines, the least expensive capacity to build. But because exploiting wind power is dependent on finding windy sites close to transmission and distribution lines, wind’s expansion has been slower than its advocates had predicted.

Bloomberg has put together some data to show that solar power is approaching a point of parity with other sources of electricity. The cost of solar panels has been dropping by as much as 24 percent for each doubling in manufacturing capacity, which leads to a virtuous cycle: lower prices create more demand which spurs greater manufacturing capacity. In interactive chart at the Bloomberg link demonstrates that, depending on a couple of financial assumptions, solar power is already at grid parity in countries with either high electricity prices (such as Germany) or lots of sunlight (such as Italy and Brazil). If the solar panel cost trends continue, solar power will reach grid parity in the U.S. by the end of the decade.

Cheap wind and solar power may well eliminate the need to add more coal-burning power stations, but it won’t by itself displace existing plants that are up and running and already paid for. To accomplish that, some actual policy steps will need to be taken.

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The Editor

John G. Falcioni is Editor-in-Chief of Mechanical Engineering magazine, the flagship publication of the American Society of Mechanical Engineers.

April 2012

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