• 3 minutes Oil Price Could Fall To $30 If Global Deal Not Extended
  • 8 minutes Why Is America (Texas) Burning Millions of Dollars Per Day Of Natural Gas?
  • 11 minutes Is $60/Bbl WTI still considered a break even for Shale Oil
  • 15 minutes CNN:America's oil boom will break more records this year. OPEC is stuck in retreat
  • 26 mins The Pope: "Climate change ... doomsday predictions can no longer be met with irony or disdain."
  • 9 hours Hormuz and surrounding waters: Energy Threats to the World: Oil, LNG, shipping markets digest new risks after Strait of Hormuz attack
  • 13 hours As Iran Nuclear Deal Flounders, France Turns To Saudi For Oil
  • 9 hours The Magic and Wonders of US Shale Supply: Keeping energy price shock minimised: US oil supply keeping lid on prices despite global risks: IEA chief
  • 18 hours Middle East on brink: Oil tankers attacked off Oman
  • 12 hours Never Knew Gasoline Prices were this important!
  • 9 hours Russia removes special military forces from Venezuela . . . . Maduro gone by September ? . . . Oil starts to flow ? Think so . .
  • 11 hours (Un)expectedly: UK Court Sets Assange U.S. Extradition Hearing For February 2020
  • 6 hours We Are Better Than This
  • 25 mins Plants are Dying
  • 1 day Britain makes it almost 12 days with NO COAL
  • 1 day Emmissions up, renewables nowhere
  • 10 hours The Latest: Iranian FM Says US Cannot Expect To ‘Stay Safe’
Colin Chilcoat

Colin Chilcoat

Colin Chilcoat is a specialist in Eurasian energy affairs and political institutions currently living and working in Chicago. A complete collection of his work can…

More Info

Trending Discussions

Solar Really Can Be Cheaper Than Coal

The ongoing volatility in the oil markets has led many major companies to dramatically slash their capex budgets and workforces in a bid to survive. The knock on effect of this can be seen in a burgeoning solar industry that is seizing the opportunity to finally make a significant breakthrough into the market, regardless of subsidies.

Research and consultancy group Woods Mackenzie believes we may have a shale-like boom on our hands. According to their new report “Is solar the next shale?” distributed and utility scale solar is nearly ready to transform power markets. And for this, we can thank China.

The world’ s most populous nation is not wavering in its concerted effort to bring solar to the masses and reduce the country’s marked pollution. China has vowed an installed capacity of 70 gigawatts (GW) by 2017 – or double Germany’s current world-leading capacity. Last year the country installed 10.6 GW, bringing their total grid-connected capacity to just above 28 GW.

The core of China’s growth consists of the belief that solar can indeed be cheaper than coal, and of course an exploding photovoltaic (PV) manufacturing industry, which has rapidly depressed global prices. Since 2007, Chinese PV module production has increased nearly 20-fold to 25 GW and is projected to reach 51 GW by the end of 2017. This is beyond good news for the rest of the world because solar PV costs follow a largely predictable trajectory – subject to a phenomenon many refer to as Swanson’s law. The law stipulates that for every doubling of global manufacturing capacity, the dollar per watt cost of PV cells falls by 20 percent. It has held true for nearly 40 years and data from the US Department of Energy’s National Renewable Energy Laboratory suggests we can expect the same moving toward 2030. Related: Anti-Fossil Fuel Movement Grows

Ahead of the game, China’s solar industry believes the levelized cost of solar PV will equal that of coal-fired generation by the end of 2017, at the latest. The US, for its part, is nearly there in several states, and not much farther behind in others. In California for example, utility scale solar is already competing with natural gas – and is prepared to blow it away (see below). 

NetCostNewGeneratorsCalifornia

Source: Woods Mackenzie

The above chart from Woods Mackenzie’s recent report reveals the rapidly growing profitability of investing in solar generation compared to both combined cycle and combustion turbine natural gas plants. It’s part of a national trend that is picking up pace as solar costs continue to fall while combined cycle costs rise. 

LargeScaleSolarEconomics

Source: Woods Mackenzie

By 2020, the consultancy expects 19 states to be at grid parity, doubling to 38 by 2030 – even without the Obama administration’s successful solar tax breaks. The projections assume installed distributed and utility scale solar capacity of 71 GW by 2035, or more than three times the current level. Related: The World's 10 Biggest Solar Farms

Such rapid expansion is certainly possible, but the electric and market systems will require a revamp as current structures are not designed for such a large influx of solar energy. As solar undercuts natural gas plants and other forms of electricity generation, it amasses revenues otherwise not its own. A boon to solar, a blow to gas, and the cycle continues. However, electric systems still require backup capacity during low-solar hours and under current compensation mechanisms fossil fuels cannot afford to be relegated to a secondary role.

For the time being, solar’s dominance over fossil fuels is only constrained by its increasingly rapid growth. Growth, however, is all but guaranteed as improvements to efficiency and cost advance like clockwork. Clean energy saw a 16 percent rise in investment in 2014 and has weathered oil’s fall relatively unharmed. It’s time the markets evolve.

By Colin Chilcoat of Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage

Trending Discussions


Leave a comment
  • Vanderpool on February 20 2015 said:
    Excellent news! Now, if we could run the economy on about six hours a day of electrical power, we would be able to get rid of coal and nuclear. . . . . . . .
  • Frank on February 21 2015 said:
    There are a whole lot of battery companies trying to figure out how to soak up that cheap solar juice and sell it for a profit when the sun goes down. I say, let them try, or ship some of that California sun to Ohio. Our sun goes down three hours sooner.

Leave a comment





Oilprice - The No. 1 Source for Oil & Energy News