PV can't compete with fossil fuels
It is often said that PV will never compete with fossil fuels or nuclear power. But the cost of PV is falling, and falling fast. Recent figures from industry analysts NPD Solarbuzz showed that module prices fell 46 percent from Q410 to Q411: this trend doesn’t look like it will turn around. The analysts predict a further fall of 29 percent in 2012, moving towards a total decline of between 43 and 53 percent over the next five years.
Given these decreases, in June 2011, the Institute of Electrical and Electronics Engineers (IEEE), the self-professed world’s largest association for the advancement of technology, announced that within ten years, PV has the potential to be the most economical form of generating electricity, including fossil fuels.
The IEEE adds that economies of scale have to continue to be delivered and efficiency gains need to continue. However, on that front, Professor Steven Ringel, IEEE Senior Member and Director of the Institute for Materials Research at The Ohio State University says that the environment is right for this to continue and for PV to become the lowest-price electricity option. "There’s a really healthy competition on the technology front right now," said Ringel. "Currently, we have promising technologies that are very high efficiency but with higher cost, as well as low efficiency technologies at lower cost. The technologies that will prevail will combine the best of both, delivering the greatest efficiency at the lowest cost."
Analysts AT Kearney produced an analysis of three key European markets to pv magazine to assess whether PV can compete with power costs for the consumer – dynamic grid parity – in three market segments, residential, commercial and industrial. The analysis is some of the most sophisticated that’s been published on the topic (see graphic). Even with the very conservative assumption that wholesale electricity prices will remain stable, PV’s can be seen to be competitive across Europe in the coming years.
So this is real competitiveness, without subsidy, on the very near horizon. Where the fossil fuel lobbyists are getting their figures from, who knows? What we do know is that the price of finite fossil fuels keeps rising. Furthermore, the cost of extracting them from deeper oceans, more complicated sources (shale sands) and in more environmentally sensitive areas – near coral reefs in Australia, or wilderness areas in Alaska, for example – are also pushing up costs. Even new gas reserves, which are being exploited today, require huge amounts of electricity to cool the gas to a liquid state for transportation and often that power comes from diesel. The introduction of carbon taxes will further increase the cost of fossil fuels, quite rightly some would argue.
As the international community was reminded with the Fukushima disaster last year, the nuclear industry is subsidized "through the back door" by taxpayers, as governments have to clean up after a disaster. No insurance company would provide the public liability insurance these power plants actually need. And the true costs of waste disposal are still not fully reflected in the cost of nuclear power.
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