IEEE Spectrum April, 2013 - 13

residential Solar
demand at Parity
with grid Prices, 2018

SoUrce: inStitUte for local Self-reliance

Less than 1%
1% to 5%
5% to 10%
10% or more

power. PV installed by businesses, meanwhile, will be competitive with at least
10 percent of total U.S. commercial power
consumption in 2022.
Similar patterns for the United States
emerge from academic reviews of PV power
cost, such as one published this month by
Stanford University researchers in the
journal Energy Policy. And a global analysis by the Abu Dhabi-based International
Renewable Energy Agency last year suggests
that PV is at parity in Cyprus and parts of
Italy and likely advancing fast.
As with all economic projections, these
studies rely on assumptions that are open to
criticism. Farrell's assumptions, however, are
relatively conservative. For instance, Farrell
does not provide for any change in grid prices,
which generally rise by about 2 percent per
year. He also excludes federal and state subsidies for solar power installation. Add in the

federal incentives and Farrell's 2022 nationwide parity moment for solar panels arrives in
2018, even in much of dreary Washington state.
The most controversial element in the
new economic forecasts for solar is what
drives its spread across Farrell's map as the
years pass: the assumption that PV costs
will continue to fall. Critics of solar energy
attribute its plummeting prices to massive
overproduction in China and to subsidy
trimming in Europe. According to this argument, prices will rise as more producers go
bankrupt (as Solyndra did famously in 2011
and others have since) and supply shrinks.
Stefan Reichelstein, faculty research director at Stanford's Steyer-Taylor Center
for Energy Policy and Finance, however,
says the evidence indicates otherwise. His
study, in Energy Policy, evaluated the impact of the unusually large price drops in
recent years-40 percent in 2011 alone. Re-

SOLAR SPREAD: Bright sun and high utility
rates help rooftop solar energy compete
with grid power. The map shows how much
residential demand could be fulfilled by solar
more cheaply than by the grid in 2018.

placing PV's recent dips with an extension
of its historic price curve, which has been remarkably smooth for three decades, only increases the levelized cost of today's systems
by 12 to 15 percent. This suggests that the
real drivers of PV's price decline are technology and industrial efficiency, and there
is no reason to believe they will hit a wall.
For their part, utilities are providing a
strong signal that they recognize the distributed PV price trend, and the threat it
represents to their business model: An increasing number of them are petitioning
regulators for rate increases targeted specifically at solar users. -peter Fa ir ley

nEwS

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Table of Contents for the Digital Edition of IEEE Spectrum April, 2013

IEEE Spectrum April, 2013 - Cover1
IEEE Spectrum April, 2013 - Cover2
IEEE Spectrum April, 2013 - 1
IEEE Spectrum April, 2013 - 2
IEEE Spectrum April, 2013 - 3
IEEE Spectrum April, 2013 - 4
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IEEE Spectrum April, 2013 - 63
IEEE Spectrum April, 2013 - 64
IEEE Spectrum April, 2013 - Cover3
IEEE Spectrum April, 2013 - Cover4
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