Grid parity


I’ve been following discussions of solar energy on-and-off for quite a while, and it has always seemed as if it would be quite a long time, even assuming an emissions trading scheme or carbon tax, before solar photovoltaics could be a cost-competitive source of electricity without special support such as capital subsidies or feed-in tariffs set above market prices.

But looking at the issue again today, I’m finding lots of claims that this “grid parity” will be achieved in the next few years, and even one company, First Solar, that claims to be already at grid parity with a 12 MW plant in Nevada completed last year . Obviously, Nevada is a particularly favorable location, and there is plenty of room for judgement in cost estimates. Still, looking at a lot of different reports, it seems clear that, with a carbon price of say $50/tonne (about 5 cents/kwh for black coal and 7 cents/kwh for brown coal), solar will be cost-competitive with coal for most places in Australia without any need for fundamental technical improvements.

The big question is whether the industry can ramp up from its current small scale (about 5 GW capacity produced last year) to meet global demands for growth and replace a significant part of the existing 4TW of mainly fossil-based capacity, with even more needed if we are to have big growth in electric vehicles. There’s no obvious constraint in the long run, since silicon is abundant and ubiquitous. But the price of the high-purity silicon crystals used in solar cells skyrocketed as demand rose in recent years (it used to be available cheaply as an offcut from the semiconductor industry, but solar demand has outstripped this source). Prices have fallen with the onset of the financial crisis, but will presumably rise again if demand recovers.

However, in the long run, and with no absolute resource constraints, costs should fall further as all elements of the manufacturing chain scale up. And over 20 years or so, with continued growth of 20-30 per cent a year, the necessary scale would be achieved If so (and assuming contributions from other renewable sources) the transition to a post-carbon economy could be faster and cheaper than most existing estimates suggest.

All this seems a bit too good to be true, so please feel free to point out problems I haven’t noticed.

56 thoughts on “Grid parity

  1. I am not convinced that the proposition that solar must somehow decline in cost so that it may draw in true product substitution. The argument is spurious.

    It is demonstrated by analysis and accepted politically that there are net costs associated with any carbon reduction scheme and then there are structural time lags for adaptation.

    To demand production efficencies from solar power system manufacturers as a prime condition for for substitution is irrational. The ongoing maintenance and generation costs of domestic solar feeding to the grid falls to near zero over a short life cycle of each installed unit, which offsets the capital upfront requirement. There is no sensible reason to continue opposition to domestic households being able to access effectively free energy other than vested interests which are not those of wider society.

    Could we not achieve a more medium term outcome by immediately moving or beginning to move all households (Excepting multi-story building dwellers) off the grid and install a solar system with batteries in every home. The take up rate would stop the natural increase in electricity generation required for increasing numbers of dwellings and in several years their would be a decline in electricity output from the coal fired power stations to equal or match that required by industry and commerce.

    Simultaneously we could commence a major tree planting and reforestation program with a national tree census as they did in Meiji Japan. IT is cheaper and more efficient to invest in trees and plants that are natural CO2 harvesters than relying on energy dependent mechanical technology.

    Industry could committ to sustainable energy and set a time line the same as converting domestic dwellings, inversely.

    The Federal Government would fund the program as a National Infrastructure program, insteady of taming the Snowy we could be “Harnessing the Photons”.

    The central objective is to get the planet on low levels of CO2 emissions and fossil energy depletion.

  2. Once again Rudd has resiled on climate change policy. He’s a serial resiler.

    With both major parties in the pocket of Big Carbon what hope have we got?

  3. Iconoclast-In all sincerity-None.Might as well sit back and watch events unfold, good advice from one the world’s leading petro-geologists and any number of decent scientists. We are slowly but surely going to find out what happens when you cut down the last tree (Diamond J).

  4. There was a big project (with big hype) to make a 1km high solar chimney a few years back from these guys

    It seems to have stopped and almost started again

    Interesting to note that although we have very little in the way of production or utilisation of PV or solar thermal in Oz, UNSW (Prof Martin Green) and Sydney Uni (Dr David Mills) are two of the worlds leading research centres on the respective technologies. Mills has since left Sydney to establish Ausra in California

    Just like the Oil shocks of the 70’s that drove both these groups into renewable energy, last years oil shock has seen a huge investment in R&D and manufacturing, especially in Singapore, California, Germany and Japan. Now that oil prices have crashed many are saying it’s deja vu all over again. We need to get the ETS in there now to keep the momentum going. As JQ points out the cost of single crystal silicon has also crashed which will help maintain the run.

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