(note: all quotes are from Nemet’s How Solar Energy Became Cheap unless otherwise noted.) Welcome to Part II of “How did Solar Power Get Cheap?” To recap Part I, the modern solar photovoltaic (PV) cell was invented at Bell Labs in 1954. Early markets were almost entirely satellites, followed by other remote power uses such as navigation buoys and offshore platforms. The US led the world in solar cell R&D until the mid-1980s, when a fall in energy prices caused interest in PV to wane and funding to be slashed. After this, the locus of solar PV development moved elsewhere - first to Japan, then Germany, then China.
There's a big issue with this analysis. Namely, it uses levelized cost of electricity, which bakes very aggressive assumptions about time preference into its calculation while glossing over quality issues related to solar power. When this is your standard, solar overperforms its actual performance in reality. After all, you can throw up a solar farm in a relatively short timespan, especially with regulators largely leaving solar projects alone. Compare this to, say, a nuclear plant which will take years to build even if it doesn't get tied up in regulations for decades. By LCOE, the nuclear plant will fare much worse. In some sense, it should. After all, nuclear plants have loans which accumulate interest while the plant is under construction/fighting red tape.
But... look, your background is in architecture, so imagine I started talking about a revolutionary new technology which, under my Levelized Cost Of Shelter framework was vastly cheaper than conventional construction. I take you out to a demonstration site where I... pitch a perfectly normal tent. This is a very tight analogy, you can pitch a tent in a few hours, rarely need to deal with regulation, etc. But anyone who's been on a bad camping trip will tell you that no, tents aren't actually relevantly analogous to houses. In the energy context, nuclear (and coal, and LNG, and...) have properties (constant flows of energy, supply scalability which is responsive to demand, no need for battery-based energy storage infrastructure) which are hidden by a simple LCOE comparison. If you look at another framework, like energy return on energy invested, solar is actually not very cost-competitive with fossil fuels and nuclear. That's why, virtually everywhere they're widely deployed, renewables energy systems need to be supplemented with fossil fuels on pain of brownouts and blackouts.
So, before we ask "how did solar power get so cheap?" we should ask "did solar power get so cheap?" By at least one measurement which is in many ways more reasonable than LCOE, it didn't.
Do you have any thoughts on the claims that LCOE measures substantially undercount the costs of solar (and wind) due to the direct and indirect (ie grid) effects of intermittency?
Please, stop repeating the lie that solar is not the least expensive form of electrical energy. See for example "The Unpopular Truth about Electricity and the Future of Energy." The authors point out that LCOE studies omit important costs.
But all one really needs to do is to look at the cost of electricity vs solar penetration. Countries with a lot of solar (and wind) pay much more for electrical energy.
One query you say of non panel cost '(in residential PV, it’s closer to 80%) - but does that take into account that there is no land cost when its put on a house or garage roof? Its only about installation and the other bits?
The dialog around this is very interesting to me because there seem to be two extremely polarized sides of this topic. There are those who are excited about the current low cost of solar and (especially) exponential curves of improvement. But then there are those (as you see in some of the comments below) who are beyond skeptical because they believe the cost advantages are illusory and/or because they believe that the storage/intermittency problems aren't solved.
I have been looking for an honest broker analysis of this but haven't been able to find any great ones. If the exponential improvements in both solar and storage continue then the answer becomes obvious but I don't have the ability to figure out if that is likely to continue.
> [2] - This is described as a very generous policy for reasons which are unclear to me.
It short cut difficult negotiations with electricity providers and you got 90% of the end price. Imagine if you would get today in the US 20 Cents per kwh of solar power!
My favorite article on China's contribution to solar power was on Business Insider, "China Laughed When It Saw How Cheap Solar Could Be":
“We have a looming environmental problem due to wanting much more electricity.”
“What are some possible solutions?”
“Solar could one day be cheaper and solve both the cost and pollution problems.”
“How much money do you need to find out?”
“A lot, about $10 billion”
At this point the leadership fall on the floor laughing. China is a country where they build entire ghost cities with nobody in them. They build massive public transportation systems in 15 years because they can. Spending $10bn to find out if they can solve both energy and pollution was completely worth it to them.
How Did Solar Power Get Cheap? Part II
There's a big issue with this analysis. Namely, it uses levelized cost of electricity, which bakes very aggressive assumptions about time preference into its calculation while glossing over quality issues related to solar power. When this is your standard, solar overperforms its actual performance in reality. After all, you can throw up a solar farm in a relatively short timespan, especially with regulators largely leaving solar projects alone. Compare this to, say, a nuclear plant which will take years to build even if it doesn't get tied up in regulations for decades. By LCOE, the nuclear plant will fare much worse. In some sense, it should. After all, nuclear plants have loans which accumulate interest while the plant is under construction/fighting red tape.
But... look, your background is in architecture, so imagine I started talking about a revolutionary new technology which, under my Levelized Cost Of Shelter framework was vastly cheaper than conventional construction. I take you out to a demonstration site where I... pitch a perfectly normal tent. This is a very tight analogy, you can pitch a tent in a few hours, rarely need to deal with regulation, etc. But anyone who's been on a bad camping trip will tell you that no, tents aren't actually relevantly analogous to houses. In the energy context, nuclear (and coal, and LNG, and...) have properties (constant flows of energy, supply scalability which is responsive to demand, no need for battery-based energy storage infrastructure) which are hidden by a simple LCOE comparison. If you look at another framework, like energy return on energy invested, solar is actually not very cost-competitive with fossil fuels and nuclear. That's why, virtually everywhere they're widely deployed, renewables energy systems need to be supplemented with fossil fuels on pain of brownouts and blackouts.
So, before we ask "how did solar power get so cheap?" we should ask "did solar power get so cheap?" By at least one measurement which is in many ways more reasonable than LCOE, it didn't.
Do you have any thoughts on the claims that LCOE measures substantially undercount the costs of solar (and wind) due to the direct and indirect (ie grid) effects of intermittency?
Please, stop repeating the lie that solar is not the least expensive form of electrical energy. See for example "The Unpopular Truth about Electricity and the Future of Energy." The authors point out that LCOE studies omit important costs.
But all one really needs to do is to look at the cost of electricity vs solar penetration. Countries with a lot of solar (and wind) pay much more for electrical energy.
Great, thanks.
One query you say of non panel cost '(in residential PV, it’s closer to 80%) - but does that take into account that there is no land cost when its put on a house or garage roof? Its only about installation and the other bits?
The dialog around this is very interesting to me because there seem to be two extremely polarized sides of this topic. There are those who are excited about the current low cost of solar and (especially) exponential curves of improvement. But then there are those (as you see in some of the comments below) who are beyond skeptical because they believe the cost advantages are illusory and/or because they believe that the storage/intermittency problems aren't solved.
I have been looking for an honest broker analysis of this but haven't been able to find any great ones. If the exponential improvements in both solar and storage continue then the answer becomes obvious but I don't have the ability to figure out if that is likely to continue.
> [2] - This is described as a very generous policy for reasons which are unclear to me.
It short cut difficult negotiations with electricity providers and you got 90% of the end price. Imagine if you would get today in the US 20 Cents per kwh of solar power!
How much of the cost of a PV panel lies in the cost of the energy used to manufacture it?
My favorite article on China's contribution to solar power was on Business Insider, "China Laughed When It Saw How Cheap Solar Could Be":
“We have a looming environmental problem due to wanting much more electricity.”
“What are some possible solutions?”
“Solar could one day be cheaper and solve both the cost and pollution problems.”
“How much money do you need to find out?”
“A lot, about $10 billion”
At this point the leadership fall on the floor laughing. China is a country where they build entire ghost cities with nobody in them. They build massive public transportation systems in 15 years because they can. Spending $10bn to find out if they can solve both energy and pollution was completely worth it to them.
https://www.businessinsider.com/china-laughed-when-it-saw-how-cheap-solar-could-be-2014-6?op=1
P.S. What, no mention of Swanson's Law?
Nicely done, Brian! Only quibble is that the proper term is solar modules, not panels, but that’s a tiny nit to pick.