Wednesday, August 31, 2016

Here comes the Sun

Unlike this post from a couple of days ago, this post is about good news.  And perhaps a constructive follow-up to this one?

What news do I bring to you?
The installed price of solar energy has declined significantly in recent years as policy and market forces have driven more and more solar installations.
You see, I wasn't kidding about the good news and cheer that even General Malaise can occasionally bring ;)

Notice something in the chart below?


To me, the key there is the sharply reducing cost of utility-scale solar power.  We can do bits and pieces with solar panels on our roof tops, but if the utilities are able to get into the act, then that will be a game-changer.  Which is where the best news of all is:
Perhaps the most interesting piece of data to come out in the latest Lawrence Berkeley National Lab reports is the trend in the price of solar power purchase agreements or PPAs. These prices reflect the price paid for long-term contracts for the bulk purchase of solar electricity. The latest data show that the 2015 solar PPA price fell below $50 per megawatt-hour (or 5 cents per kilowatt-hour) in 4 of the 5 regions analyzed. In the power industry, the rule of thumb for the average market price of electricity is about $30 to $40 per megawatt-hour—so solar is poised to match the price of conventional power generation if prices continue to decline.
The market is reacting already and "will certainly be interesting to see what kind of market dynamic develops as solar approaches the tipping point."

That tipping point is also news from Chile:
Solar power just sold for the lowest price ever, in Chile.
The Spanish developer Solarpack Corp. Tecnologica won contracts to sell power from a 120-megawatt solar plant for $29.10 a megawatt-hour at an energy auction this week.
That’s the lowest price on record for electricity from sunshine, surpassing a deal in Dubai in May. It’s the cheapest to date for any kind of renewable energy, and was almost half the price of coal power sold in the same event. According to Solarpack General Director Inigo Malo de Molina, it’s one of the lowest rates ever for any kind of electricity, anywhere.
Again, note that this is the market that is responding.

Now, about the "bits and pieces with solar panels on our roof tops" that I mentioned earlier in the post, the economies of scale might be different with solar:
somewhat counterintuitively, there are no clear economies of scale in utility-scale solar. Bigger plants, represented by bigger circles in the chart, don’t seem to be producing cheaper power. The authors speculate that this is in part due to the increased regulatory and land-use hassles that come with plants over a certain size, which cancel out any savings. (Interestingly, there are economies of scale on the small-solar side. It seems solar power gets cheaper up to the 5 MW to 20 MW range, and then levels out.
Of course, we have a long way to go.  But, it seems like we are on the right path.


4 comments:

Ramesh said...

Yes, cost of solar power are coming down, but I hadn't realised so dramatically. Indeed the market works.

In India solar power hasn't reached utility scale as yet (although wind power has - if you travel from Tirunelveli to Kanyakumari, all you will see are windmills). I looked at solar power for powering the rural centres in the company I am associated with now, but the economics were simply too against. We'll watch the costs carefully and when they reach the tipping point, we'll convert.

Bravo Captain Goodhope :)

Sriram Khé said...

Yes, I even have photographs of windmills in the stretch between Tirunelveli and Nagerkoil, from my sabbatical time travels. It was mighty impressive.

The break-even point for solar will do wonders for the transformation of sub-Saharan Africa too. Even General Malaise can be optimistic sometimes--and become Captain Goodhope ;) Hopefully, with a few posts like this, I will earn the promotion to General Sanguine?

Anne in Salem said...

"In part due to the increased regulatory and land-use hassles that come with plants over a certain size." Leave it to government to mess up the least destructive fuel source known to man.

I've noticed miniscule solar panels powering all sorts of things - signs on the highway, gates, even the contraption on the side of the road telling me how much I am driving over the speed limit. Perhaps there is an incentive for these, but costs must be coming down to have so many around.

Sriram Khé said...

Oh yeah, government and land use ... it cuts across party lines too. Recall the vehement opposition led by Ted Kennedy against windmills in New England because, ahem, need I complete? ;) Most land use regulations like that come from that awful "NIMBY" attitude ... which is all the more why I was pleasantly surprised at windmills practically on farms in India.

Yes, the costs are coming down a lot. And, like you, I too have been noticing the explosive growth in those speed-limit signage with solar power. But, the speed limit signs never worry me because I am one awful slow coach anyway ;)

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