Solar's dramatic cost decline will herald energy price deflation.
This chart from merchant bankers Sanford Bernstein via RenewEconomy is telling.
In 2012, solar provided just 0.17% of global energy supply (more of electricity generation, of course) In 2014, solar will produce 0.85% of global electricity supply. Solar power production has been growing at 33% per annum for the last 5 years. At this growth rate, the percentage will double every 2.5 years; within 10 years it will be at 17%. Even at half that growth rate (16% per annum) we will potentially be able to produce all electricity from solar.
Of course, that won't happen. Because (a) coal and oil producers will up their production to take advantage of high prices now if they can foresee collapsing prices ahead; and (b) silicon prices will rise (I would suppose) But silicon prices would have to soar for the technology to become uneconomic, and in any case, there are advances in PV technology which are improving the efficiency of PV panels (double click for larger) (from here, the chart is out of date, since current technology represented by empty green circles on the chart is already at 16%)
But the likelihood of price declines in coal and oil is an excellent reason to have a carbon tax. We do not want the last gasp of the carbon fuel producers to push up global temperatures any higher.
We are on the cusp -- the inevitable cusp -- of a switch to renewable energy. The sooner the better.
Disclaimer. After nearly 40 years managing money for some of the largest life offices and investment managers in the world, I think I have something to offer. These days I'm retired, and I can't by law give you advice. While I do make mistakes, I try hard to do my analysis thoroughly, and to make sure my data are correct (old habits die hard!) Also, don't ask me why I called it "Volewica". It's too late, now.
BTW, clicking on most charts will produce the original-sized, i.e., bigger version.