Solar Prices Continue to Plunge

February 12, 2018

solarprice_capac2

Above, the most recyclable yet reliably accurate headline of the last decade.

Zachary Shahan for Cleantechnica:

Solar power prices have been dropping faster than people expected, even faster than experts expected, and even faster than bullish experts expected.

I wrote about this general point a couple of years ago for an article for The Economist Group. The question I was supposed to explore was whether we needed solar technology breakthroughs in order for solar to take over the electricity generation market. Various solar experts emphasized to me that known, predictable, incremental improvements in solar PV technology and manufacturing would keep bringing down the cost of solar PV — at an incredible clip. The standout point was from Jenny Chase of Bloomberg New Energy Finance (BNEF), who highlighted that her team forecast a solar module* price drop from 62¢/watt in 2015 to 21¢/watt by 2040. That was with an assumption of no technological breakthroughs.

During a Zayed Future Energy Prize review committee meeting in September (I’m on the committee), I brought this up in one of the discussions we were having. Other analysts from BNEF who were there noted, “Actually, they’ve come down much quicker than we expected.” The average had already dropped to approximately 40¢/watt. They showed me a graph of the more recent cost drops as friendly proof. Astounding — even BNEF’s relatively “bullish” projections were far too conservative.

These BNEF analysts recommended I talk to Jenny Chase again, since she’s top of the world for tracking the solar industry, these prices, and what’s behind them. Incidentally, I was giving a presentation at Intersolar ME a couple of days later where I ended up standing right next to her at an evening rooftop reception that I nearly skipped. We had a nice long chat about the interesting history of BNEF, the disruptive solar energy industry, Donald Trump (ugh), and these surprising cost drops. I asked Jenny to provided some follow-up statements on email so that we could have the points in a nice format for this article. Here’s a deeper look at what happened, as well as some broader points of interest:

To be honest, over the past two years we have revised our experience curve down (again) — it looks like the learning rate for every doubling of cumulative manufactured crystalline silicon is more like 28% than the previously estimated 26%. PERC, diamond wire saws, and general fierce competition have been very effective in bring down prices. I suspect we’ll see more stable pricing in the next two years — we expect that, if the average module sold to a utility scale project in 2017 was about 35 cents, it will fall to 32 cents in 2018 and 31 in 2019. But of course we haven’t been very good at predictions in the past!

I recently discussed this matter in Abu Dhabi with Thierry Lepercq, Executive Vice President of Engie in charge of Research, Technology and Innovation, and separately with Michael Liebreich, founder of BNEF. One point that launched some interesting discussions: the unexpectedly low price of solar meant that new solar was starting to get competitive with electricity generation from existing fossil and nuclear power plants. It was just a couple of years ago that new solar was getting cost-competitive with new fossil power plants. That’s a big enough change, but when solar and wind get cheaper than electricity from 20-year-old, 10-year-old, and even 1-year-old power plants … things get interesting, and messy. This is a different kind of disruptive.

With “incremental” improvements to solar cell and solar panel technology, and improvements to how solar cells and solar panels are produced, costs have been coming down at an impressive rate and are putting solar at that point. This decreases the need, usefulness, and potential of any “breakthroughs” in solar technology, since solar is already getting to the point where it will beat already built and operating coal, nuclear, and natural gas power — but breakthroughs might be on the horizon as well. I’ll come back to that in a future article, but as a short teaser, here’s Adnan Z. Amin, Director-General of the International Renewable Energy Agency (IRENA), talking about one potential leap forward:

 

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16 Responses to “Solar Prices Continue to Plunge”

  1. PeterVermont Says:

    I have been following Perovskites for a while and there continues to be tremendous progress with multiple groups having success creating far more durable devices. One of the leaders in this area has been Professor Henry Snaith of OxfordPV. He would be a terrific person to interview for this site. https://www.oxfordpv.com/

  2. Ron Voisin Says:

    Guys…wake up:

    Solar installations would abruptly curtail (terminate) if subsidies were cut

    and

    Solar photo-voltaic energy would not be price competitive even if the panels were free.

    • dumboldguy Says:

      Another good one from Ron!

      “Solar photo-voltaic energy would not be price competitive even if the panels were free”

      ROTFLMAO!

    • Don Osborn Says:

      Ron, Your comment is the definition of Alt-fact. You clearly do not do any checking of the real world around you. 1st of all PV IS clearly cost effective throughout much of the US (and world today). 2nd Are there subsidies, yes … just like ALL other energy forms. As you likely know (or should), the fossil fuel subsidies in US and globally far out weigh the solar subsidies. Real world customers, commercial and residential, are saving BOTH types of green TODAY by “going solar”. Plus, it keeps getting better. Trumps rear guard actions may marginally increase costs to US consumers but will do little to alter the trends towards renewables. The so-called “tariff” (which is another TAX that US consumers will pay, just like the wall) is unfortunate but will have marginal impact on both the overall cost of going solar and to the two foreign owned companies that brought it about. You are both misinformed and on the wrong side of history.

    • Sir Charles Says:

      Solar photo-voltaic energy would not be price competitive even if the panels were free.

    • J4Zonian Says:

      Utility-scale solar PV and wind are now cheaper in some places without subsidies and even with storage, than old fossil and fissile fuels (fffs) are with the enormous subsidies fffs continue to get. The prices of S&W continue to drop so fast* that all that will be true almost everywhere soon—probably within 2 years. CSP, 24/7 solar thermal, is also dropping fast. You’re probably either just lying, incredibly stupid or are cherry picking the price of rooftop solar, the most expensive form of solar commonly used by climate denying delayalists and anti-renewable trolls exactly this way. In addition to all its other forms, we need rooftop PV for distributed generation, and we need utility-scale solar, wind, geothermal and other renewables to replace even old fossil fuels RFN, so subsidies are still crucial to avoid global catastrophe. It’s either that or just take power from the Republicans, nationalize the fossil fuel industry (etc.) and have government mandate the changes we need in energy, agriculture, forestry, industry and elsewhere so civilization has a hope of surviving.

      Meanwhile, here’s where you’re just so, so wrong on this:

      ”Nukes get nearly 10 times more subsidies than renewables,
      oil and gas 13 times more.”
      (historical average, over a century, biofuels counted separately)
      https://cleantechnica.com/2012/08/03/oil-gas-over-13-times-more-in-historical-subsidies-than-clean-energy/

      But cumulative totals are far, far more weighted to fossil and nuke fuels than that.

      https://cleantechnica.com/2016/02/25/the-myth-about-renewable-energy-subsidies/

      5 million people a year die from fossil fuels worldwide. Hundreds of thousands more die in wars over fossil fuels, protecting fff supply lines and production or other fff-related deaths.

      Globally, 7 million die every year from air pollution, almost all of which (plus the much larger number of people made sick) could be ended by switching to clean safe renewables. http://www.who.int/mediacentre/news/releases/2014/air-pollution/en/

      All this is conscious policy; IOW, those and other externalities are just another form of subsidy. The Republicans and corporate Democrats are trying to increase subsidies and externalities of all kinds to fossil and fissile fuels while decreasing renewables’.
      http://thehill.com/policy/energy-environment/353067-trump-proposes-higher-payments-for-coal-nuclear-power
      Global externalities exceed the worth of the global economy by at least 100% (probably several times more) and it’s worse in the US.

      Fossil fuel subsidies (including some externalities) in the US are about $600 billion/yr. Globally, they’re about $5.3 trillion/yr. or 6.5% of GDP, more every year than it would cost in total, to replace them with a 100% renewable energy economy. IOW, we could spend a fraction of what we spend on fossil subsidies and externalities in a year, get rid of them forever, and have much better lives at a much cheaper cost, in every way.
      http://www.sciencedirect.com/science/article/pii/S0305750X16304867

      ”In the 2015-2016 election cycle, oil, gas, and coal companies spent $354 million in campaign contributions and lobbying and received $29.4 billion in federal subsidies in total over those same years — an 8,200% return on investment.”
      https://www.vox.com/energy-and-environment/2017/10/6/16428458/us-energy-subsidies
      That amount leaves out most of the subsidies/externalities but also a lot of the money they spent ($a billion?), so it’s more like a 60,000% return.

      “A new paper published in Climatic Change estimates that when we account for the pollution costs associated with our energy sources, gasoline costs an extra $3.80 per gallon, diesel an additional $4.80 per gallon, coal a further 24 cents per kilowatt-hour, and natural gas another 11 cents per kilowatt-hour that we don’t see in our fuel or energy bills.”
      https://www.theguardian.com/environment/climate-consensus-97-per-cent/2015/mar/18/fossil-fuels-are-way-more-expensive-than-you-think
      Other sources say the true cost of gasoline is actually $12/gal. more than the pump says.

      ”Coal can no longer compete in the free market, so the Trump administration wants to prop it up with [more] taxpayer subsidies.”
      ”Big Oil is also dependent on taxpayer subsidies”
      https://www.theguardian.com/environment/climate-consensus-97-per-cent/2017/oct/09/trumps-plan-to-bail-out-failing-fossil-fuels-with-taxpayer-subsidies-is-perverse

      “The U.S. is set apart from other G20 countries by the sheer variety of tax exemptions for fossil fuel producers,”
      ”In 2009, the G20 group of nations, which includes the United States, pledged to phase out “inefficient fossil fuel subsidies” to curb greenhouse gas emissions and tackle anthropogenic climate change. However, according to a new report, not only is the U.S. government providing over $20 billion a year to oil, gas and coal producers, the amount has increased by 35 percent since President Barack Obama took office in 2009.”
      http://www.ibtimes.com/us-fossil-fuel-subsidies-increase-dramatically-despite-climate-change-pledge-2180918

      ” The $200 Billion Fossil Fuel Subsidy You’ve Never Heard Of”
      https://www.forbes.com/sites/ucenergy/2017/02/01/the-200-billion-fossil-fuel-subsidy-youve-never-heard-of/#2fd52ee3652b

      * ”Both onshore wind and solar PV have seen insane drops in cost over the past eight years — 66 and 85 percent, respectively.”

      ”Just over the last year, utility-scale solar costs have dropped 11 percent and rooftop solar costs 26 percent. That is crazypants.”
      David Roberts Feb 3, 2017
      https://www.vox.com/science-and-health/2016/12/22/14022114/solar-year-two-remarkable-facts

    • botterd Says:

      That was far and away the dumbest comment ever.
      It should be heralded with a prize.


      • Ron is Ron
        I don’t expect my cat to understand too complex
        Same for little Ronnie

      • dumboldguy Says:

        Can’t remember if we’ve come up with a specific award for Ron as we have for other morons (like Master Bates). In memory of one of those morons, how about the “OO!” award—-for Omnologos Obtuseness. Or the DTFC—Dumber Than Frank’s Cat.

  3. Canman Says:

    Note that that graph is for the price of “solar panels”. Solar panels are just one part of solar electricity system. There’s still wiring, inverters, land for grid level, … not to mention storage. The price of panels can go to zero, and solar can still be expensive.

    • J4Zonian Says:

      Sorry, that’s just not true. See my post above, for one thing. Utility scale solar and wind–even with storage and without subsidies–are already the cheapest source of electricity in some places*, and will be the cheapest (LCOE) in most places in the world within 5 years, almost certainly sooner. Rooftop solar PV is still the most expensive commonly-used form of solar, but it’s falling even faster than utility solar, and to get an accurate accounting, the extremely low or zero cost of transmission of rooftop PV has to be factored in, showing yet another advantage over distant, centralized sources. (Another huge advantage is zero fuel costs and low maintenance costs, so even without your silly free panels this debate is over in the real world. Renewables won.

      * https://www.vox.com/energy-and-environment/2018/1/16/16895594/colorado-renewable-energy-future

      PS The decision to include new gas in Colorado is insane–a product of our disturbed economic system, in which profits are prioritized over human survival, even survival of the biosphere. This will without any doubt lead to more stranded assets as gas becomes as untenable as coal is now; meanwhile it continues to worsen the climate crisis.

      The record for lowest price ever bid for energy has been held briefly in at least half a dozen countries in the last 5 years. It’s mostly without subsidies, and now storage is now usually included as batteries drop in price as fast as wind and solar have.

      https://www.greentechmedia.com/articles/read/the-worlds-cheapest-solar-is-actually-wind-mexico#gs.9ThmngA

      https://cleantechnica.com/2018/02/06/acwa-power-develop-first-ever-utility-scale-renewable-project-saudi-arabia-record-breaking-tariff/

    • rhymeswithgoalie Says:

      Consider a steam turbine nuke or fossil fuel power plant:
      (0) Design generally requires a large chunk of capital, plus large chunks of capital to expand.
      “Solar panels are just one part of solar electricity system. There’s still wiring, inverters, land for grid level, … not to mention storage.”

      Do you have *any* idea how much it costs to design, build and maintain the industrial-grade pumps and plumbing at a traditional power plant?

      Traditional steam turbine power plants have a lot of overhead.

      (1) Power plant requires expensive labor to design, install and maintain expensive industrial-grade plumbing.
      (2) Plant requires special siting for water supply (or special water recapture technology including Legionnaires testing and maintenance). Existing plants near water are now vulnerable to (a) SLR, (b) warmer water supplies or (c) and increasing rain-bomb-induced river floods.
      (3) Site needs a reliable supply line for fuel (pipeline for gas, rail for coal, secure transport for fissionable material).
      (4) Site needs reliable management of waste (coal ash, spent fuel rods, smokestack scrubbers).
      (5) Turbines need time to spin down and up for maintenance.

      PV solar is the ultimate scalable power plant, which can be built and maintained by lower-skilled workers. Even PV power plants trashed by hurricanes can be brought back up much faster than damaged/flooded traditional plants.

      Wind turbines, once installed, have very small footprints, and are highly compatible with productive farmland.


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