A Sunny Perspective on the Future of Solar Energy

Solyndra’s recent bankruptcy has sparked much debate about the market viability of solar energy. And while solar may not be as cost-effective as fossil fuels are now, a recent analysis finds that “solar power technologies in the US and Spain are likely to approach competitiveness with fossil-fired generation by around 2020.”

This finding, from the July 2011 article “Shedding Light on Solar Technologies” by Michael Peters, Tobias Schmidt, David Wiederkehr, and Malte Schneider, is its most important. The authors’ conclusion resulted from a comprehensive assessment of the main types of solar energy technologies — concentrating solar power (CSP) parabolic trough, photovoltaic (PV) crystalline silicon (c-Si), and PV thin film — and estimation of the current and future levelized cost of electricity (LCOE) for each in specific locations in the Southwest United States as well as Spain, Germany, China, and Egypt.

Currently, solar power is 80-200% more costly than electricity from combined cycle gas turbines (CCGT). The authors argue that those costs will not drop enough to be competitive with fossil fuels without substantial support from government policies. In particular, they cite the need for renewed dedication to research and development in the field of solar energy and the gradual lowering of fossil fuel subsidies.

In addition, the analysis highlights the importance of picking the right technology for a given location. The researchers argue that CSP systems are increasingly favored to PV alternatives in the Southwest United States because there exists a “high share of [direct normal irradiation], high temperatures, and low latitude.” This finding is crucial since PV technology currently dominates the market, even though it is more suitable to areas with “a relatively high share of diffuse irradiation, medium average temperature, and a latitude above 35 degrees such as Spain and Inner Mongolia.”

The authors argue that the potential for cost-competitive solar power within ten years justifies government policies to support the sector’s development. And while they describe the methodology by which they arrive at these future price estimates in great detail, predicting a market ten years into the future is likely to be contested. For example, the authors’ cost estimates rely on some very specific technological breakthroughs, such as the ability of CSP parabolic trough systems to increase steam cycle temperatures from 400 degrees Celsius to 500 degrees. Anyone weighing the decision to subsidize solar power projects would be wise to further investigate the likelihood of this and other key assumptions.