Solar photovoltaic system costs have fallen steadily for decades. They are projected to fall even farther over the next 10 years. Meanwhile, projected costs for construction of new nuclear plants have risen steadily over the last decade, and they continue to rise.
The Backdrop for Change
Electricity supply systems all over the world are facing the most rapid changes in their operating environments and technologies since the formative years of the industry. A tide of change is sweeping over the industry, one that challenges industry managers to stay abreast of these developments or risk presiding over costly anachronisms. The era of “build plants, sell power” is over; the rapid changes underway require a more agile, many-faceted approach to meeting energy demand in a responsible manner.
For thirty years, increasing the efficiency of electricity use has been known to be a faster and cheaper alternative to building new power plants. Energy efficiency advances are working their way into the marketplace and into consumer habits so that electricity demand is hardly growing at all. The accelerated adoption of energy-saving methods in the building industry, in the manufacture of appliances and lighting, and in retrofitting existing buildings means that annual electricity demand in homes, businesses and public buildings soon will begin a slow decline.
Electricity supply systems all over the world are facing the most rapid changes in their operating environments and technologies since the formative years of the industry. A tide of change is sweeping over the industry, one that challenges industry managers to stay abreast of these developments or risk presiding over costly anachronisms. The era of “build plants, sell power” is over; the rapid changes underway require a more agile, many-faceted approach to meeting energy demand in a responsible manner.
For thirty years, increasing the efficiency of electricity use has been known to be a faster and cheaper alternative to building new power plants. Energy efficiency advances are working their way into the marketplace and into consumer habits so that electricity demand is hardly growing at all. The accelerated adoption of energy-saving methods in the building industry, in the manufacture of appliances and lighting, and in retrofitting existing buildings means that annual electricity demand in homes, businesses and public buildings soon will begin a slow decline.
The partial electrification of transportation (electric vehicles) will open new markets for electricity, but when used in electric vehicles, electricity is much more efficient than fossil fuels. The overall additional demand will be modest, and can be accommodated at off-peak times, or even better, powered by solar installations.
The emergence of wind power as a relatively cheap source of electricity has further complicated life for the traditional generating industry. Those who think it too intermittent to be useful have had to revise their opinions as successively larger amounts of wind power have been absorbed into many utility systems. Careful modeling has shown that penetrations of 20%, climbing to 30%, of overall electricity usage can be accommodated — mainly by rearranging the management of existing generation equipment rather than by building extensive backup facilities.
Combined heat and power (cogeneration) has long been a means of generating electricity by burning a fuel for a primary use, then using the leftover heat for other purposes. Industries using process heat have found this beneficial for years. Commercial buildings with heating and cooling loads now also find it economical.
By comparison, coal and nuclear plants are extremely inefficient; they waste large amounts of heat — two-thirds of the energy content of the fuels — and consume enormous quantities of water in the process.
The Sun is Changing the Game
By 2009, energy efficiency methods, combined heat and power, wind farm generation and solar water heating had all challenged the traditional business model of “build plants; sell power” favored by the big utilities. All are cheaper and can be put into service much faster than building new fossil and nuclear power plants.
Wind energy can complement solar to offset the intermittency of each technology. Several states are developing offshore wind turbines along the eastern seaboard.
Now, in 2010, comes the final blow to the old way of doing business for utilities. In many places around the world, solar electricity, once the most expensive of the “renewables,” has become cheaper than electricity from new nuclear plants.
According to researchers at the Lawrence Berkeley National Laboratory, solar photovoltaic system costs declined from $12 per installed watt in 1998 to $8 in 2008 on average — a one-third decline in ten years. In 2009 and 2010, costs declined more rapidly as module prices fell sharply, bringing the 12-year system cost decline to 50%. At mid-2010, based on figures provided by North Carolina installers, large systems can produce electricity at 12–14 cents or less per kilowatt-hour, while the middle range for residential systems comes in at 13–19 cents per kilowatt-hour, hence the average cost shown of 16 cents.
The possibility of selling renewable credits tilts the advantage farther in the direction of solar electricity. Experienced industry observers see photovoltaic system costs continuing to decline in the coming decade as the industry — from cell makers to installers — expands at a record pace and moves rapidly along the typical industrial “learning curve.” Present mid-range costs are 14–19 cents per kilowatt-hour for rooftop solar electric systems, and approximately 14 cents for commercial-scale systems. Sector-wide costs in 2020 are projected to be 7.5 cents per kilowatt-hour.
Similarly, solar water heating has an “avoided cost” advantage over heating water with electricity from a new nuclear plant. Water heating accounts for 15–25% of a typical homeowner’s power bill. In 2009 more than 7,000 megawatts (MW) of solar generating capacity was installed in the world, of which half was in Germany. In the U.S., 429 MW was installed, with California and New Jersey as the leading states. North Carolina installed 8 MW.
Cumulative worldwide installations at the end of 2009 passed the 22,000 MW mark. Germany, Spain and Japan led in total installed capacity with 9000 MW in Germany alone. The U. S figure stood at 1653 MW of which 1102 MW was in California and 128 MW in New Jersey.
The Sun is Changing the Game
By 2009, energy efficiency methods, combined heat and power, wind farm generation and solar water heating had all challenged the traditional business model of “build plants; sell power” favored by the big utilities. All are cheaper and can be put into service much faster than building new fossil and nuclear power plants.
Wind energy can complement solar to offset the intermittency of each technology. Several states are developing offshore wind turbines along the eastern seaboard.
Now, in 2010, comes the final blow to the old way of doing business for utilities. In many places around the world, solar electricity, once the most expensive of the “renewables,” has become cheaper than electricity from new nuclear plants.
According to researchers at the Lawrence Berkeley National Laboratory, solar photovoltaic system costs declined from $12 per installed watt in 1998 to $8 in 2008 on average — a one-third decline in ten years. In 2009 and 2010, costs declined more rapidly as module prices fell sharply, bringing the 12-year system cost decline to 50%. At mid-2010, based on figures provided by North Carolina installers, large systems can produce electricity at 12–14 cents or less per kilowatt-hour, while the middle range for residential systems comes in at 13–19 cents per kilowatt-hour, hence the average cost shown of 16 cents.
The possibility of selling renewable credits tilts the advantage farther in the direction of solar electricity. Experienced industry observers see photovoltaic system costs continuing to decline in the coming decade as the industry — from cell makers to installers — expands at a record pace and moves rapidly along the typical industrial “learning curve.” Present mid-range costs are 14–19 cents per kilowatt-hour for rooftop solar electric systems, and approximately 14 cents for commercial-scale systems. Sector-wide costs in 2020 are projected to be 7.5 cents per kilowatt-hour.
Similarly, solar water heating has an “avoided cost” advantage over heating water with electricity from a new nuclear plant. Water heating accounts for 15–25% of a typical homeowner’s power bill. In 2009 more than 7,000 megawatts (MW) of solar generating capacity was installed in the world, of which half was in Germany. In the U.S., 429 MW was installed, with California and New Jersey as the leading states. North Carolina installed 8 MW.
Cumulative worldwide installations at the end of 2009 passed the 22,000 MW mark. Germany, Spain and Japan led in total installed capacity with 9000 MW in Germany alone. The U. S figure stood at 1653 MW of which 1102 MW was in California and 128 MW in New Jersey.
The PV market is poised to explode worldwide as a “least-cost” way to generate electricity. By comparison, no U.S. nuclear power plants have been put into service in many years. Most proposed reactors are in the range of 1100 to 1200 MW. The dramatic change facing the utility industry is highlighted by the observation that efficiency gains, combined heat and power, and most of the solar supply is located at homes, businesses and public buildings, and is not sourced from centralized power plants. The power industry and the energy economy as a whole are being driven toward this “distributed” power model.
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