Insanely cheap solar

This comes from a long article by Ramez Naam which is worth reading in its entirety.  Today, I'll just excerpt some key points.

I've talked before about learning curves.  For any new technology, for every doubling of installed capacity, costs fall.   This creates a virtuous circle: falling costs lead to increased demand which leads to further cost falls, which leads to further demand increases, and so on.  This was evident with the Model T Ford, it's happening right now with wind, solar and batteries, and it's just started with space exploration.  With the model T Ford, the learning curve was -15% per doubling.  With solar it's more than twice as fast.

The chart shows 7 data series, some for the US, some global, and one each for India and China.  They also show the total cost: the cost of the panels, their supports, the concrete bases, the cost of permits, the cost of inverters, the cost of connection to the grid.  Note the rapid "learning rate"—for every doubling, costs decline by 30-40%. 

It's clear enough what each doubling in solar installations means.  But what does it look like over time?  Here, Naam uses the IEA's forecast of 16% per annum growth from the IEA, which he thinks, as I do, is too low (the IEA has a terrible forecasting record)

That gives this chart:

[Just a reminder:  1 cent/kWh = $10/MWh; 5 cents/kWh=$50/MWh.]

As the chart shows, in ultra-low cost locations (low latitude deserts such as the Gulf states) solar is already cheaper than all paid-off and depreciated fossil fuel alternatives, which includes cheap gas.   In mid latitudes (green line) that point will be reached by 2030, but even before that, some fossil fuel generators (coal) will be driven out of business.  Remember: the grey area in the chart doesn't represent the new-build cost of fossil fuel plants, it shows the marginal cost, while the costs of solar shown are for new-build facilities.  By 2035, even in high latitudes, new-build solar will cost less than the operating cost of existing coal and gas.

As Naam says:

This incredible pace of solar cost decline, with average prices in sunny parts of the world down to a penny or two by 2030 or 2035, is just remarkable. Building new solar would routinely be cheaper than operating already built fossil fuel plants, even in the world of ultra-cheap natural gas we live in now. This is what I’ve called the third phase of clean energy, where building new clean energy is cheaper than keeping fossil fuel plants running. Even in places like Northern Europe, by the later 2030s we’d see solar costs below the operating cost of fossil fuels, providing cheap electricity in summer months with their very long days in the high latitudes. These prices would be disruptive to a large fraction of already operating fossil fuel power plants – particularly coal power plants, that are far less able to ramp their power flexibly to follow solar’s day-night cycle.

In a purely open market, these incredibly low prices would drive the world’s remaining coal plants into bankruptcy, and steal some of the most profitable operating hours even from cheap natural gas plants.

Solar, if it keeps dropping at this pace, could well be by far the cheapest electricity over the vast majority of areas where people live. Nothing would ever be quite the same in the world of energy.

Of course, we won't be able to run the grid only on solar in high latitudes, because although solar is surprisingly good in summer, it's terrible in winter.  We'll use wind as well, which is complementary to solar, and we'll use power-to-gas (storing surplus electricity as synthetic natural gas).  As the cost of batteries plunges, we'll also use batteries, as well as demand management (agreeing to sell electricity at a discount to big users in return for the right to cut their power for several hours at a time)  By 2035, I think it unlikely that there will be any coal-fired power stations still operating.

I recommend you read the whole article.  It's worth it.