Solar Prices Hit All-Time Lows, Cheaper Than Fossil Fuels

First Solar, which has long led the solar industry on reducing the price of solar modules, says it expects to cut manufacturing costs by almost half again.

Doing so would meet the goals of the US Department of Energy’s (DOE) SunShot Initiative three years ahead of time. Its goal is to reduce the cost of solar PV below $1 per watt by 2020, making it fully competitive with fossil fuels without subsidies.

By 2018, First Solar says it can cut the cost of manufacturing solar modules to just $0.35 per watt from the current $0.63 per watt on average. That would, in turn, bring the total installed cost of a solar panel (including racking and inverters) below $1 a watt – down from $1.59 today.

First Solar Logo

The company is able to achieve these cost reductions because it keeps improving the conversion efficiency of its cadmium telluride thin-film panels. It currently stands at 17.2% and will reach 19.5% by 2017, they project.

The record for thin film solar was recently set in Germany at 20.8% efficiency.

A new partnership with General Electric should cut costs even more, as they work together on utility-scale solar plant design.

Recently, First Solar also announced it will return to the business of installing rooftop solar after years of specializing in building utility-scale projects. It will continue on both fronts – with natural gas prices rising, utilities are showing interest in building 20 MW to 50 MW solar plants.

"This is significant because as solar prices are coming down, fossil fuel prices are headed quickly in the opposite direction. The US has been hailed as the nation of cheap gas, but that is proving to be an illusion betrayed by rapid depletion rates of wells and the growing challenge of deeper and more complicated reserves. Not to mention the water and other environmental considerations," notes Giles Parkinson at RenewEconomy.

Great Deals on Solar Electricity

In what could be the lowest price for solar electricity ever, utility Austin Energy signed a 25-year deal for just under $0.05 per kilowatt hour (kWh). The electricity will come from two solar farms in West Texas, a 150 MW and 50 MW plant built by Sun Edison.
 

The closest price to date was from First Solar, when it offered 50 MW at $0.0579 cents per kilowatt-hour for 25 years in New Mexico. North Carolina rates are below $0.07 and the city of Palo Alto is paying $0.04 per kWh from a smallish 300 kW project.

What’s
really impressive about the Austin deal is that unlike the others, the price for solar is without state or local subsidies.

And $0.05 per Kwh is less than a third of what the utility paid in 2009. It beats the cost of natural gas ($0.07), coal ($0.10) and nuclear ($0.13). 

"When you think about the volatility of natural gas, a 25-year power purchase agreement starts to look pretty attractive," Bret Kadison of energy investment firm Brazos Resources, told Greentech Media. 

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