What Happens When Solar Power Is as Cheap as Coal

It's a horrible paradox that bad things are generally cheaper: Like Big Macs. Or H&M. Top of this list, of course, is coal power, which is really quite horrible for the planet but is also deliciously cheap to produce. We are, if nothing else, a bottom-line driven society. Besides the rarefied few of us who are willing to drop more money on organic food and clean power just because it's the right thing to do, most people--out of necessity--are going to gravitate toward the cheapest and easiest option. Coal power is so cheap, it's what the power company supplies without you asking. Sign me up! But now, according to new predictions from Bloomberg New Energy Finance, solar power is going to be the wallet-friendly option as soon as 2013. This is faster than was originally thought. For instance, the Bush administration set a goal for this to occur by 2015, and others predicted that as well. Two years ahead of schedule on creating an entirely new cost-efficient and clean power source is really not too shabby.

Grid parity is the technical term for when an alternative energy's cost equals that of the traditional electricity supply--which, in the U.S., is mostly coal. It simply means that solar panels are becoming so cheap to produce and so efficient that they can now battle with the giant coal-fired power-generating structure we've developed. Currently, coal costs about 7 cents a watt, versus 22 cents for solar. But the solar industry is moving so fast that those costs will be equal--at least for utilities--by 2013. In sunny places like California, it's already much closer during peak hours, when the sun is shining and coal power becomes more expensive. Should you prefer your information more technical and in graphic form, see this explanatory chart by Stephen O’Rourke of Deutsche Bank:

In other words, once grid parity is reached, it becomes economically stupid for power companies to not be installing large fields of solar panels to generate the cheapest form of available energy. And while power companies are generally portrayed as evil conglomerates headed by Mr. Burns-esque figures (and for all we know, they probably are), evil conglomerates with shareholders can't really afford to make economically stupid decisions, as much as their leaders secretly want to destroy the environment. They've caught on to that, which is why solar panel installations are expected to double in the next two years. It's not people putting them on their houses driving most of that change, it's large scale installations. You're not going to notice the change, and that's good: No one will have to do anything to get clean solar power. It's just going to come from the same place as your old dirty power.

Bonus stock tip: if these predictions turn out to be right, and the moment of solar grid parity is upon us, it might be a good time to be in the solar panel business. The cheapest product available is usually in pretty high demand.

Follow Fast Company on Twitter. Morgan Clendaniel can be reached by email or on Twitter.

[Image via the Noun Project]

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5 Comments

  • Melissa

    Obvious solution to at least part of the land-area thing: parking lots.  Set up solar panels as shade structures in large parking lots.  You get solar power, no "virgin" land is used up, and cars get shade to park in.  Everybody wins.

  • Moondoggers

    better to have solar on every roof than take vast tracts of PUBLIC LANDS and destroy habitat.

  • Garry Golden

    It is not grid parity - but grid access and demand management that matters. Unfortunately this conversation on solar is missing a critical component - integration into current grid paradigm. Utilities are unlikely to integrate -even w/ storage solutions that don't exist.
    I think the key for solar is reaching a price point for distributed power - and (likely more important) shifting to solar-to-fuels model. There is little money in electrons- and the real upside for light - is light into chemical bonds (fuels). So - I'm excited to see advances in solar but think we need to manage expectations properly. Simply expecting price to shift utility behavior is wishful thinking. I think the solar sector would be wise to by-pass the grid - and develop distributed solar to fuels technologies that can produce a higher value product than electrons. (Otherwise you must fit within a very complex regulatory and operating environment of The Grid. And that requires more than price parity)

  • RalfLippold

    Shout message out to public. Exponential development improvements well under way. One would be amazed to learn about is on research on the cutting edge to mainstream application.

  • Randall Seden

    As exciting news as this is, the truth is here in California we had a company with all the permits in place to build a mega Solar Plant in the desert till a group of Eco-extremists filed law suits to block it from being built. So what do the eco-extemists want us to use for power,coal? We the people of California should be able to sue these eco-idiots for blocking this solar project-who do they thing they are? Nothing but unelected private citizens with their big bucks lawyers hocking to make a buck in their lawsuits.