Natural Gas, Not Corporations, Killing Solar Power

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Why aren't the deserts and prairies of our country plastered with solar panels? Why don't we turn on all of our appliances knowing that we are relying only on the billions of years of constantly replenished light that our sun will provide us? Isn't the price of solar power going down? What is going on?

Indeed, every year since solar photovoltaic (PV) cells began to be manufactured, they have dropped in cost and increased in performance. The ultimate measure of a PV cell is the price you pay to generate a certain amount of electricity with it.

The measure commonly used for all energy sources is cost per kilowatt-hour ($/kWh), which is the cost of producing 1000 watts of power for one hour. This is not the total price that you as a consumer pay for electricity (unless you make your own power), but the price that the power company pays to make it. They make their profit by selling it to you at a higher price.

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Approximate current energy costs

Right now, producing one kWh of electricity via solar energy costs the power company somewhere in the neighborhood of $0.20. This is an improvement over five years ago, when the cost was closer to $0.30-$0.40 and certainly an improvement over 20 years ago when the cost was around $0.60 per kWh.

There is a problem however. Energy produced from those giant propellers that dot the landscape of Wyoming, Texas and the California coast can produce electricity for $0.09/kWh. This is currently the cheapest widespread renewable energy resource.

So what are the fossil fuel prices? Here lies the real rub.

Burning coal to produce energy costs only $0.05/kWh. The real kicker though, is natural gas, which can be used to produce electricity for even less than $0.04/kWh. The bottom has dropped out of natural gas prices over the past four years. Gas costs less than one quarter of what it did in 2008.

So long as natural gas stays this cheap, and with the advent of advanced hydraulic fracturing ("fracking") techniques it may remain cheap for years (and maybe even decades). Thus, it will take solar a while to become competitive in the free market.

As much as we would all love to see solar power become the primary source of domestic energy, it will be at least several more years before this becomes cost-effective. When might this time be reached?

Well, the price has been dropping continuously for three decades, and it is reasonable to assume that it will keep doing so. Solar cell technology relies on the semiconductor industry, which has a stellar record of progress: cheaper and faster every year like clockwork since 1970. However, exact predictions are very hard to make and many "experts" have predicted that we would have reached this point already. Optimistic predictions say that by the end of the decade we may arrive. Is this true? Impossible to say.

Whether solar ever reaches market price will depend as much on the cost of other energy sources as on progress in the field. With natural gas so cheap, I would not bet on it for 10 more years.
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