While You Were Getting Worked Up Over Oil Prices, This Just Happened to Solar

By Tom Randall –

Photographer: Chris Sattlberger/Getty Images

Every time fossil fuels get cheaper, people lose interest in solar deployment. That may be about to change.

After years of struggling against cheap natural gas prices and variable subsidies, solar electricity is on track to be as cheap or cheaper than average electricity-bill prices in 47 U.S. states — in 2016, according to a Deutsche Bank report published this week. That’s assuming the U.S. maintains its 30 percent tax credit on system costs, which is set to expire that same year.

Even if the tax credit drops to 10 percent, solar will soon reach price parity with conventional electricity in well over half the nation: 36 states. Gone are the days when solar panels were an exotic plaything of Earth-loving rich people. Solar is becoming mainstream, and prices will continue to drop as the technology improves and financing becomes more affordable, according to the report.

The chart below shows how far solar will come out ahead in each state in 2016, assuming a worst-case scenario of lower tax credits. The blue bars show the anticipated cost of solar energy (assuming a conservative 20-year lifespan for the panels) minus average electricity prices. Positive numbers indicate the savings for every kilowatt hour of electricity.

Grid Parity to Reach 36 States in 2016

Source: Deutsche Bank, EIA. Graph shows LCOE minus average electricity price

Source: Deutsche Bank, EIA. Graph shows LCOE minus average electricity price

Solar has already reached grid parity in 10 states that are responsible for 90 percent of U.S. solar electricity production. In those states alone, installed capacity growth will increase as much as sixfold over the next three to four years, Deutsche Bank analyst Vishal Shah wrote in the Oct. 26 report.

The reason solar-power generation will increasingly dominate: it’s a technology, not a fuel. As such, efficiency increases and prices fall as time goes on. The price of Earth’s limited fossil fuels tends to go the other direction. Michael Park, an analyst at Sanford Bernstein, has a term for the staggering price relationship between solar and fossil fuels: the Terrordome. I’m not sure exactly what that means, but it doesn’t sound very forgiving.

The chart below shows the price of energy sources since the late 1940s. The extreme outlier, of course, is solar, which only recently became an expensive blip in the energy marketplace. It will soon undercut even the cheapest fossil fuels in many regions of the planet, including poorer nations where billion-dollar coal plants aren’t always practical.

Source: EIA, CIA, World Bank, Bernstein analysis

Source: EIA, CIA, World Bank, Bernstein analysis

Solar will be the world’s biggest single source of electricity by 2050, according to a recent estimate by the International Energy Agency. Currently, it’s responsible for just a fraction of one percent.

Because of solar’s small market share today, no matter how quickly capacity expands, it won’t have much immediate impact on the price of other forms of energy. But soon, for the first time, the reverse may also be true: Gas and coal prices will lose their sway over the solar industry.

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About steve@bayintegratedmarketing.com

Steve Ulrich is a principal at Bay Integrated Marketing: www.bayintegratedmarketing.com. I have been working with people to maximize their use of social media and internet publishing, optimize their websites to turn prospects into customers, and establish their personal brand on the internet. We are also working with Eco Distribution, Inc. to find and implement practical solutions to help clean up our air and the environment. Eco Distribution, Inc. is a California based Distributor and Representative Firm dealing in environmentally friendly and Green solutions. We have leveraged 30 years experience in responsible construction management to provide solutions for some of the most impactful challenges facing our air, water, and land. We have an oil/hydrocarbon remediation system that is effective on everything from simple oil stains on a driveway, to complex oil disasters in the ocean. My approach to social media and internet marketing is simple. Instead of spending a fortune “buying” keywords and ads that don’t return anything we concentrate on three areas: I CAN GET YOU FOUND ON LINKEDIN - NUMBER ONE, PAGE ONE.
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