Solar Threatening Fossil Dominance in China – and the US

June 2, 2014

One more reason (besides appalling air quality and water shortages) China is moving toward renewables.

Ambrose Evans Pritchard in The Telegraph:

Here is a story to cheer us all up. Wuxi Suntech Power expects the cost of electricity from solar modules match to coal-powered stations in China as soon as 2016. If so, we are entering a dramatically different world.

The company’s chief executive, Eric Luo, told RenewEconomy that grid parity is at hand, even in competing with the cheapest and dirtiest form of fossil fuels.

“We are sure that by 2016 – or at the latest 2017 – the levellised cost of solar PV will be the same as coal-fired generation. It is going to completely transform the energy market in China,” he said.

Coal makes up 69pc of China’s energy supply. It is the biggest single cause of Airpocalypse, the suffocation of Chinese cities in perma-smog. The Communist Party is hell-bent on cutting reliance before the middle classes rise up in fury.

 

Monetary Realism:

I’ve been getting into Solar lately – the fall in prices has been absolutely shocking over the last 2-4 years. We are seeing price drops closer to 20% per year after several decades at 6% price drops per year. 6% year is a fantastic rate of decreases, but 20% is simply astonishing.
20% is an impressive number, but putting it into context will make your jaw drop with astonishment. My calculations show that if solar maintains 5 more years at current 23% rates per year price drops, solar power will be cheaper than using existing coal plants. That’s right – it will be cheaper to build new solar plants than to use existing coal plants.
It sounds absolutely crazy. But it seems true looking at the data.

Let’s use 18% as the yearly price drop as an estimate for the yearly price drop since 2010, and then plug this into the levelized cost of energy used in the Zwiebel paper. The current prices for PV solar are probably close to $.09. This is still higher than coal for existing plants, but much lower than in 2010.
But the more remarkable data point is that we can expect solar to be cheaper than existing (not new) coal is in just a few years. We can expect some solar to be cheaper than existing coal in 2016. That’s when the levelized cost of newly installed PV solar should be cheaper than using an existing coal plant. That’s not far away at all.
And then just a few years after that, PV solar could become much, much cheaper than coal. Imagine 10 years at 18% drops in price. Where would the price of PV Solar be then?  It will beabout 50% of the price of coal.
I hate to speculate, but imagine PV solar drops at 18% per year for 20 years?  Solar will be about 1/10th the cost of coal.  Basically, people will start begging for Solar power in just a few years, because it will be so much cheaper than coal power.
Even if we use the First Solar numbers – which is almost certainly a low ball estimate  – we are still talking 15% per year price drops in installed PV Solar. Even using 12% a year, Solar becomes cheaper than coal in under 10 years.
18% is a pretty big number, but we have seen much, much larger decreases in price over the last 2 years. Over the last 5 years, we’ve seen far larger drops than 18% per year. The pipe line for putting new PV solar discoveries into production makes it pretty clear we can see 18% for the next 5 years at least – and if that is the case, PV solar will be cheaper than coal.
But that’s not even everything. Something to notice in the Forbes article is the lowest number for installed utility solar. The lowest number for installed PV Solar was under $2.00 per watt in Q3 2012. This lowest number is going to drop at a healthy clip too – and that is the number some people are going to be looking at when they consider their own projects. In some places, PV Solar will be cheaper than coal in under 3 years.

Then, there is this Edison Electrical Institute report to consider. (Update Mike: Something is strange with this link here it is – www.eei.org/ourissues/finance/Documents/disruptivechallenges.pdf)
One prominent example is in the area of distributed solar PV, where the threats to the centralized utility business model have accelerated due to:
  • The decline in the price of PV panels from $3.80/watt in 2008 to $0.86/watt in mid-20121. While some will question the sustainability of cost-curve trends experienced, it is expected that PV panel costs will not increase (or not increase meaningfully) even as the current supply glut is resolved. As a result, the all-in cost of PV solar installation approximates $5/watt, with expectations of the cost declining further as scale is realized;
  • An increase in utility rates such that the competitive price opportunity for PV solar is now “in the market” for approximately 16 percent of the U.S. retail electricity market where rates are at or above $0.15/kWh2. In addition, projections by PV industry participants suggest that the “in the money” market size will double the share of contestable revenue by 2017 (to 33 percent, or $170 billion of annual utility revenue);
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25 Responses to “Solar Threatening Fossil Dominance in China – and the US”

  1. dumboldguy Says:

    Some good news to lighten up the gloomy mood induced by the unstoppable demise of the west Antarctic ice sheet? Perhaps. It would have been happier news if that pie chart of China’s energy sources hadn’t been displayed for us visual types to look at and start doing numbers in our heads. Dang those pesky things right in front of our noses that can’t be ignored in favor of pie-in-the-sky.

    “Other renewables” at ~1% and fossil fuels at over 90%? Hmmmmmm.


  2. Well, I do hope all this solar optimism is not just public relations. But I have to say that I’m a bit suspicious when the main source of information for these optimistic projections is the CEO of a company that makes solar panels. I would prefer a more unbiased source, but that’s just me.

    I do agree that solar panels have experienced an impressive drop in prices. I think that’s mainly due to the power of mass production. You see that in just about any new technology that suddenly takes off – cars, computers, and cell phones, to give some other examples. All well and good, but eventually you run into what’s known as “the law of diminishing returns.” So I wouldn’t be too confident that we’ll continue to see a 23% drop in prices every year indefinitely. The very cheap (and toxic) cadtel panels that First Solar sells will eventually run into a cost issue when tellurium (a very rare earth element) gets even rarer.

    But we’ll see. I’m not in the business of making predictions. I remember when we were all told that we’d have astronauts on Mars by 1980 – that didn’t work out, though perhaps it could have if the political will was there. But political will matters too.


  3. I’m skeptical about the prospects for such radical cost reductions going forward.  That requires that cover glass, framing, sealants, wires and installation also get cheaper.  Those elements aren’t going to change in cost much even if the PV material itself becomes free.

    PV only makes electricity cheap when the sun is shining.  There must be equivalent cuts in the cost of storage to make PV electricity cheap when the sun is NOT shining.  Maybe Ambri can come up with something, but the numbers being quoted pencil out to very UN-economic costs for anything beyond overnight storage.  Even one cloudy day means fallback to something else, and the entire season of winter tends to be cloudy here at the 45th parallel.


  4. […] One more reason (besides appalling air quality and water shortages) China is moving toward renewables. Ambrose Evans Pritchard in The Telegraph: Here is a story to cheer us all up. Wuxi Suntech Pow…  […]


  5. Take a look at this. Peter just reported on this US EPA carbon development.
    The Federal Government Just Announced the Biggest Clean Energy Boost Since the Stimulus

    The Federal Government Just Announced the Biggest Clean Energy Boost Since the Stimulus
    Action Sports Photography / Shutterstock.com
    EPA’s new carbon rule could grow renewable capacity by an additional 70 percent in the next decade.

    http://www.greentechmedia.com/articles/read/the-white-house-just-announced-the-biggest-clean-energy-boost

    “That could mean an additional 21,000 megawatts of renewable energy capacity in the next decade and a half. Those numbers may actually be somewhat low. GTM Research expects the solar PV market alone to reach roughly 8,000 megawatts by 2016 without any additional policy changes. However, if the federal Investment Tax Credit expires in 2017, the carbon rule could provide an additional boost in deployment through the end of the decade.”

    IMO the current Republican anti GW anti renewables tack cannot last. It takes a groundswell of public opinion and a change in policy. An all out national and international plan to head off disaster. A hands off economic system approach just waits until its too late. We could have done most of this years ago if we had a united effort that recognized the dangers of GW and resource depletion.

    • dumboldguy Says:

      “EPA’s new carbon rule could grow renewable capacity by an additional 70 percent in the next decade”.

      To round things off, that would be an increase from ~15% to ~25%.

      “That could mean an additional 21,000 megawatts of renewable energy capacity in the next decade and a half”.

      21,000 MW = 21 GW. Considering that the total generating capacity in the US is around 1,000 GW, that doesn’t seem like much. Check my math—something doesn’t add up.


    • “That could mean an additional 21,000 megawatts of renewable energy capacity….

      Key word there, “capacity”.  Not “average generation”.

      If we assume it’s all wind at 35% capacity factor (solar is much worse), it would produce an average of just 7,350 MW.  Meanwhile, the 4 AP1000’s being built at Vogtle and S.C. Summer will have a nameplate capacity of 4400 MW and probably average about 4000.  Given a decade and a half, and some impetus from the White House to make the NRC streamline its 42-month-minimum site-approval process to something that takes a more reasonable 12 months, we could easily have 20,000 MW a decade and a half from now.

      • dumboldguy Says:

        If and when the dam breaks and we have to go on a crash program of building nukes, let’s hope they’re a better design than the AP-1000. Or are we going to succumb to the “good old boy” thing and continue to build PWR’s because that’s all they know how to do?


        • When the NRC wants 10 years and roughly $1 billion ($274 per staff-hour) to train the regulators to write the regulations for a new type of reactor, and now requires a customer before a design before it will accept an application for that design, PWRs and BWRs will remain the 2 options.

          Absent a president willing to kick butt or a Congress ready to just revoke the NRC’s authority and let companies build, China and India will be selling molten-salt reactors in international commerce before the NRC allows one in the USA.


          • Sorry, “customer for a design”.

          • dumboldguy Says:

            You can’t be serious that it takes 10 YEARS and a BILLION $$$ just to TRAIN the REGULATORS to WRITE regulations for a new design. I would like to see some links to that data.

            The PWR and BWR lobbyists have gotten a whole herd of camels under that tent if that is true. And what is the point of NOT accepting an “application” for a new design unless there is a customer? Does not the free enterprise system allow people to risk their time and energy in the hopes of profit?

            No, I think the problem is that B&W, GE, CE, and Westinghouse just don’t have the expertise to move away from the old and embrace the new. Just like the coal companies, they will milk every penny out of their old technology. (And which one of those companies pays you a fee to flack LWR for them?).


          • You can’t be serious that it takes 10 YEARS and a BILLION $$$ just to TRAIN the REGULATORS to WRITE regulations for a new design. I would like to see some links to that data.

            I’ll make a deal with you.  I will dig up the place where I saw that, and try to get some confirming data from authoritative sources.  In return, you will:
            1.  Apologize for your constant use of slurs, and never use them again.
            2.  Admit that some of your statements have been libelous and would have been damaging if I was not using a pseudonym instead of my legal name, and retract them with a promise to cease and desist.

            You will put your promises in writing, with your legal name and confirmed by copy of photo ID.  I’ll give you a PO box to send them to.

          • dumboldguy Says:

            DDOF yet again, E-Pot? That’s a very bad deal you offer.

            1) You made all that BS up, and therefore CAN’T dig it up.
            2) I do not “slur” you, merely offer OPINIONS about your many failings that I can support with FACTS and that everyone else on Crock seems to agree with. YOU are the one who needs to apologize to the Crock community for the damage you do to the discourse here and promise to “cease and desist” with your foolishness.
            3) SOME of my statements have been libelous? You have just admitted that some of my statements are therefore NOT libelous but true statements of fact. Would you care to list out the two groups so I can respond?

            I’m glad that you now display a minimal understanding of defamation law in this comment, but all I can say to “You will put your promises in writing, with your legal name and confirmed by copy of photo ID. I’ll give you a PO box to send them to” is………………. BWA-HA-HA-HA-HA-HA-HA!.

            Fool!

            PS Answer me this? Why do you always fail to answer direct questions and attempt to divert and deflect?


          • Typical ape:  take the poop and throw it.

            Translating from gibbering-ape to English, your answer appears to be “no, I’m not interested in an actual BET and I refuse to be held accountable for my words.”  Nice to have this cleared up.

          • dumboldguy Says:

            And I’M the one who throws slurs? LOL

            No, I’m really not interested in your feeble attempts to salvage your delusions (that you characterize here as a “BET”), and you are welcome to play the “demented rooster strutting in the barnyard” all you want. You have DDOF too many times and have been again caught with your pants down. Stop diverting and deflecting, and provide the links. To remind you:

            ‘You can’t be serious that it takes 10 YEARS and a BILLION $$$ just to TRAIN the REGULATORS to WRITE regulations for a new design. I would like to see some links to that data”.

            In case you have forgotten, this is a blog devoted to CLIMATE CHANGE, not you.

  6. MorinMoss Says:

    I don’t see those ~20% decreases going on indefinitely but there is still many ways the cost of solar can be dramatically reduced.
    Germany has shown the way with significantly lower soft costs compared to the USA.

    And I don’t doubt that there WILL be sharp decreases in the cost of storage across at least the next decade. Perhaps we’ll also see storage warehouses like Rubenius had planned but failed to achieve in Mexico.


  7. New energy in the US and EU is dominantly renewable. Only China is expanding coal and is the real threat.
    http://cleantechnica.com/2014/04/20/92-1-new-electricity-capacity-renewables-1st-quarter-2014/

    • dumboldguy Says:

      Yes, the cost of PV panels is falling rapidly. And the use of renewables of all kinds is expanding rapidly as well. Swell!

      In their zeal to look at the bright side, Christopher and Nick are ignoring the 600 pound gorilla in the room. Fossil fuels are STILL the major source of energy on the planet by a huge margin, their total consumption is projected to RISE even though their proportion of the total mix will decline (slowly), and the dirtiest of them all (coal) is going to be with us for a long time (until the SHTF in a big way anyway). AGW will progress, CO2 will continue to rise, ice will continue to melt, more tipping points like East Antarctica will be reached.

      Wake up and smell the skunk cabbage, guys. It’s not a rose garden we live in.


      • Wrong. There is nothing so obvious as the dominance of FF. Renewables have barely started, supressed by the usual culprits. They can and will grow exponentially. And FF will likewise as they grow scarcer. Is this fast enough for GW? Maybe not. And no it’s not looking at the bright side. This should have been done as a national initiative decades ago, instead we ran into the free market bs that ends up sucking every last ounce of oil out if the ground. I think someone said you can count on the US to do the right thing when all else fails. My input is coming from a perspective of seeing conservation and renewables reviled for decades. Few, me included, expected wind or solar PV to have an impact in our lifetimes, post Reagan. Yet here we are in the US with 4.18% electricity from wind. EIA never predicted that. No one predicted solar grid parity so soon, either. Progress is slow. We face a resource depletion problem before 2100. The future is impossible without renewables. The economic systems we live with don’t look ahead with insight. They wait for emergencies, then respond. Don’t blame renewables for that. It took a the committed will of the German population to say, let’s go this way. A leap of faith. Hasn’t happened here so far. The barrier is neither economic, nor technical. Renewables cannot solve limitless growth or political and social problems. What’s slowing wind is political pressure. As many pointed out, we could have used war money protecting oil interests to invest in renewables and tech like EVs and would have been richer for it at a fraction of the cost. I don’t think EIA projections are realistic and I have shown why. Neither do I think China can continue BAU much longer. Given the nature of things , the question is how bad are things going to have to get to take action. Apparently the answer is much worse. We are about to find out in six months or so when the next El Niño hits.
        I will leave you with this. As a young student, I travelled to Oklahoma for a competition on Energu alternatives. Professors and federal officials showed up. A few authors suggested conservation. The federal officials turn at the lecture produced this. Speaking against conservation he said, we don’t share bars of soap like the Europeans. We just drill more oil. Your tax dollars at work.

        • dumboldguy Says:

          So you DO smell the skunk cabbage after all. I too am looking forward to seeing what the next year and a half brings, both in terms of AGW and whether or not the U.S. “does the right thing when all else fails”.


          • Perhaps I take it for granted that everyone else knows what an uphill battle it is. My musing is not to wonder that alternatives are feasible, but that they happen at all. While most think a big breakthrough technology is the answer, the truth is that alternatives are just muzzled by monopoly. There was no big breakthrough in wind and solar. The upwind three bladed fiberglass bladed turbine is decades old. The Tvind wind turbine was a volunteer built 1MW turbine, Started in 1975. NASA had built two bladed types. Richard Swanson started Sunpower, a company that makes very efficient PV cells, in 1985. What’s driving the cost improvements is manufacturing volume and improvements, not new design concepts. The Germans kick started PV recent cost decline with volume.
            Swanson’s law states, “an observation that solar cell prices decline by 20% for every doubling of solar panel industry capacity.[3] The law is often compared to the better known Moore’s Law.”
            The preoccupation with renewable energy econometrics is frustrating. Economics are partly the result of volume which is by choice. FF has used its dominance to keep alternative volume low. Now that that’s over, change is mercurial. The wonder is not that renewables have grown so rapidly, but that they have grown at all, given the relentless abuse they get. The False PR war against renewables has always been the problem. FF, like tobacco, know that advertising can counter competition. Their henchmen are busy with Machiavellian monopolistic schemes and lobbying against alternatives while singing the praises of free enterprise. Predictably, we are seeing plenty of that from coal right now. One expects a dying hornet to try to sting.
            http://windsofchange.dk/WOC-tvind.php
            http://en.wikipedia.org/wiki/Richard_Swanson


  8. […] 2014/06/02: PSinclair: Solar Threatening Fossil Dominance in China — and the US […]


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