Evaluating the cost- effectiveness of renewable power has always been a fairly simple calculation. As manufacturers lowered their production costs and improved the generating efficiency of their technology, renewables became more cost competitive with conventional sources of power.
Now, that assessment has become a little murkier. Two recent studies in particular present contrasting interpretations of solar-power costs.
In October, the Department of Energy released a report that takes the more conventional position. Published jointly by the Department’s National Renewable Energy Laboratory and the Lawrence Berkeley National Laboratory, the report identifies a sharp decline in the price of solar in 2013 and projects a continuing decline for 2014.
“Photovoltaic Pricing Trends: Historical, Recent, and Near-Term Projections (2014 Edition)” notes the price of solar-power systems dropped by 12 percentage points to 19 percent in 2013. It ranges a bit due to variations in geography, markets and prevailing utility rates. Of note in the report is a drop in the price of utility-scale solar-power systems to below $2 per watt last year.
The report projects the price of photovoltaic (PV) systems in the United States to continue on this downward trend through 2016, adding that, “at these pricing levels, PV is expected to reach widespread grid parity in the U.S. without federal or state subsidies” by 2020.
A report from the European Union reaches a completely different conclusion about the overall costs of solar power. The report, “Subsidies and Costs of EU Energy,” claims to examine the “true costs” of all energy production on the European continent. It examines factors that are not typically considered, including external costs, the costs of government intervention (such as subsidies) and environmental impact (such as the depletion of natural resources and the pollution generated during the manufacturing process).
Surprisingly, solar power did not score well in the analysis, costing more than coal, natural gas, wind and nuclear. The study considered a number of factors that are not typically examined in the usual side-by-side comparison of the benefits and costs of the different sources of power.