Solar power cheaper than coal

2011-09-14 07:17

Andreas Späth

Many critics of renewable energy technologies will tell you that they're a wonderful idea which they'd support whole-heartedly if they weren't so bloody expensive. It might come as somewhat of a surprise then that the day when electricity generated by harnessing the energy of the sun will cost less than electricity produced by burning coal isn't far off at all.

The cost of solar power has dropped exponentially for three decades and the trend continues unabated. According to the US Department of Energy's National Renewable Energy Laboratory, the price of photovoltaic (PV) electricity (excluding installation) has plummeted from $22 per Watt in 1980 to just $3 today. In Germany, solar PV output has increased by 76% since 2010 while equipment prices have dropped by 50% since 2006. This year alone, the cost of conventional solar panels has fallen by over 20% internationally.

Michael Liebreich, the CEO of London-based research company Bloomberg New Energy Finance notes that "the most powerful driver in our industry is the relentless reduction of cost". Some commentators have suggested that solar power will reach price parity with coal by 2020, a mere nine years from now, but their estimates are turning out to be rather conservative:

• In May, General Electric's global research director, Mark M Little, suggested that his company's thin-film PV technology would deliver cheaper electricity than fossil fuels or nuclear plants within three to five years.

• In June, the world's largest thin-film solar panel manufacturer, Arizona-based First Solar, announced that they expect to be supplying power utilities in California at cheaper-than-coal prices in 2014.

• In August, a report by a think tank linked to the Chinese government projected that solar power would be as cheap as or cheaper than coal by 2015. China is set to double its solar electricity generating capacity to 2 Gigawatts by the end of this year, up from 900 Megawatts at the end of 2010.

• This month, a study published by the European Photovoltaic Industry Association suggested that parts of Europe could see cost parity between solar energy and the cheapest fossil fuels as early as 2013.

• For many poor, remote and rural areas in developing countries, locally produced solar power is already cheaper than electricity generated at large, centralised coal-fired plants.

Given all of this, you'd think the South African government would go all out to invest in solar energy in our sun-drenched country. Not so. We continue to build massive new coal power stations, ensuring that by the time solar power is cheaper than coal, we'll remain almost exclusively reliant on this non-renewable fossil fuel which will become more expensive as reserves decrease and carbon-emission taxes become mandatory internationally.

In addition to tumbling costs, solar energy comes with some very important extra benefits:

• significantly reduced greenhouse gas emissions and climate change impacts;

• cleaner air and less acid rain;

• much reduced water consumption compared to coal or nuclear power plants;

• employment – a home-grown solar manufacturing, installation and service industry has the potential to create tens of thousands of sustainable new jobs; and

• less environmental degradation from mining and pollution.

By stark contrast, burning coal to produce electricity has very substantial negative environmental and human health impacts, all of which are routinely ignored – or "externalised" – in cost calculations. A recent study co-authored by Dr Paul Epstein, Director of the Harvard Medical School, estimates that "the life cycle effects of coal and the waste stream generated are costing the US public a third to over one-half of a trillion dollars annually".

In effect, we've all been subsidising the coal industry to the tune of billions of rands every year. As private individuals and as taxpayers we've been footing the bill for the damage it's doing to our health and to our environment, and we'll continue to do so for many years to come.

We need fundamental change. It's high time that our government saw the light and did everything possible to get us off our national coal addiction by truly supporting renewable energy sources like solar power. For the sake of our people, our planet and our budget.

- Andreas has a PhD in geochemistry and manages Lobby Books, the independent book shop at Idasa's Cape Town Democracy Centre. Follow him on Twitter: @Andreas_Spath

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