Solar’s getting cheaper, fast

by Stephen Lacey.

Cross-posted from .

There’s a joke in the solar industry about when “grid parity”—the time when solar becomes as cheap as fossil sources—will happen. Ron Kenedi, the former VP in Sharp Solar’s U.S. business liked to throw out random dates, telling me once “November 21, 2012” in jest.

The truth is, it will happen in phases—one market and one technology at a time.

But according to two top solar executives—Tom Dinwoodie, chief technology officer and founder of and Dan Shugar, former president of SunPower and current CEO of —“ferocious cost reductions” are accelerating that crossover in a variety of markets today.

Dinwoodie and Shugar are responsible for developing over $3 billion in photovoltaic (PV) projects around the world. They were making the rounds in Washington this week, giving presentations to journalists and policymakers about the changing economics of solar PV. Joining them was , the executive director of the , an organization responsible for much of the state-level progress for solar in the U.S. (Vote Solar helped put together the data.)

Their goal: to explain that solar PV is no longer a fringe, cost-prohibitive technology—but, rather, a near-commodity that is quickly becoming competitive with new nuclear, new natural gas, and, soon, new coal.

These slides are a must-see for anyone interested in solar, or in the business of energy generally. While I think some of the predictions and comparisons between technologies aren’t telling the full picture, the underlying data is very compelling: We are starting to realize grid parity in solar—all with technologies available today.

Let’s take a look.

Notice in the first chart how steadily manufacturing costs have come down, from $60 a watt in the mid-1970’s to $1.50 today. People often point to a “” in solar—meaning that for every cumulative doubling of manufacturing capacity, costs fall 20 percent. In solar PV manufacturing, costs have fallen about 18 percent for every doubling of production. “It holds up very closely,” says Solaria’s Shugar.

The “Moore’s Law” analogy doesn’t necessarily work on the installation side, as you have all kinds of variables in permitting, financing, and hardware costs. But with incredible advances in web-based tools to make sales and permitting easier; new sophisticated racking, wiring, and inverter technologies to make installation faster and cheaper; and all kinds of innovative businesses providing point-of-sale financing (think auto sales), costs on the installation side have fallen steadily as well. The Rocky Mountain Institute projects that [PDF] will fall by 50 percent in the next five years. (Note: This chart is from RMI, not from the Dinwoodie/Shugar presentation.)

What has driven these cost reductions? A staggering ramp-up in installations around the world that have driven an even greater increase in solar manufacturing. (By the end of this year, GTM Research predicts we’ll have of module global production capacity.)

As SunPower’s Dinwoodie puts it:

That 17 gigawatts installed in 2010 is the equivalent of 17 nuclear power plants—manufactured, shipped, and installed in one year. It can take decades just to install a nuclear plant. Think about that. I heard Bill Gates recently call solar “cute.” Well, that’s 17 gigawatts of “cute” adding up at an astonishing pace.

He has an excellent rhetorical point, which highlights the brilliance of solar: This modular technology can be produced and installed at a pace far faster than most energy technologies. And businesses are getting at doing so.

However, this comparison neglects the “value” of energy. Nuclear is a baseload resource; solar PV is more of a “peaking” resource. To compare 17 gigawatts of global solar PV development to 17 giga…

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