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.