Development with Fossil or Solar Energy?

The price of solar power has been rapidly decling over the past several decades (~ 7%/year decline in US$/watt or a cost halving every 10 years ).  This drop , combined with peristently high oil prices is producing some interesting dynamics. New Scientist has an interesting article on the rapid drop in the price of solar power in India.  Where many people and unconnected to the power grid, and for those that are the brittleness of the grid means that many people rely on generators:

Recent figures from market analysts Bloomberg New Energy Finance (BNEF)show that the price of solar panels fell by almost 50 per cent in 2011. They are now just one-quarter of what they were in 2008. That makes them a cost-effective option for many people in developing countries. .. Now [India’s] generators could be on their way out. In India, electricity from solar supplied to the grid has fallen to just 8.78 rupees per kilowatt-hour compared with 17 rupees for diesel. The drop has little to do with improvements in the notoriously poor efficiency of solar panels: industrial panels still only convery 15 to 18 per cent of the energy they receive into electricity. But they are now much cheaper to produce, so inefficiency is no longer a major sticking point. …The one thing stopping households buying a solar panel is the initial cost, says Amit Kumar, director of energy-environment technology development at The Energy and Resources Institute in New Delhi, India. Buying a solar panel is more expensive than buying a diesel generator, but according to Chase’s calculations solar becomes cheaper than diesel after seven years. The panels last 25 years. Even in India, solar electricity remains twice as expensive as electricity from coal, but that may soon change. While the price drop in 2011 was exceptional, analysts agree that solar will keep getting cheaper. Suntech’s in-house analysts predict that, by 2015, solar electricity will be as cheap as grid electricity in half of all countries. When that happens, expect to see solar panels wherever you go.

A similar article about the USA, was recently in the business magazine Fast Company.

2 thoughts on “Development with Fossil or Solar Energy?”

  1. Your numbers are a bit off as solar power has more dramatically reduced over the past few years than you indicate. Since 2008 when solar prices were at $4-$5 per watt for panels, panel prices are now at $0.70 per watt – an 80% drop in price. Depending on assumptions for future natural gas prices, solar is quickly becoming the lowest priced electricity supply option.

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