#14 Is Solar Energy an Economical Alternative to Conventional Energy?
- Katt Anomia
- Sep 5, 2015
- 3 min read
1. The cost of solar electricity has fallen drastically over the years. Even with the falling prices of oil, solar electricity is expected to be competitive with the retail price of electricity thanks to a dramatic reduction in cost as well as improved financing. Unsubsidized solar panels on a person's roof costs $0.08 to $0.13kWh, which is 30-40% cheaper than the cost of electricity in many markets around the world. In areas where coal is the main electricity source, the cost ratio has gone from 7:1 to less than 2:1, and is expected to get to 1:1 over the next year or two. Solar system costs have declined at 15% compound annual growth rate over the last 8 years and another 40% drop is expected over the next 4 to 5 years.
2. That all looks great! But let's look at some numbers crunched out in real time, in the US rather than globally, by someone who is on the other team. Diana Furchtgott-Roth, former Chief Economist at the US Department of Labor, is not so optimistic. She says that currently solar energy makes up a small fraction of 1% of our energy, and costs twice as much to produce. Natural gas makes up 27% of our energy. If we were to convert that to solar, our electricity bills would go up an estimated 25%. For energy plants entering the market in 2019, it's estimated that electricity produced from natural gas would cost $66 per megawatt hour while solar would cost $130. So yes, prices may be falling, but that doesn't make sunlight the economic decision.
3. Another expert, H. Sterling Burnett, PhD, Research Fellow for Environment at The Heartland Institute, points out that solar energy is simply underwhelming - there's not nearly enough bang for your buck. The cost of production is high and the amount of power is low. In terms of economy, it doesn't really make sense.
4. And yet, it still just might be worth it on an individual scale. According to the Director of Democratic Energy at the Institute for Local Self-Reliance, falling rates for individual acquisition mean that it's becoming easier and easier for single families and businesses to get in on the solar panel plan, which is cost effective in our current system. It provides consumers with more choices, more freedom, and political control than a centralized shift towards solar. It allows us to challenge the energy monopoly that currently exists in our country.
I do believe that renewable energy is the future for our country and the world. There are simply too many people to cling to finite resources. Wind and light? We don't run out of that. With that said, I don't believe a centralized shift to solar energy is economically feasible right now. But that doesn't mean we can't start that process on an individual level! Costs are falling and it's becoming easier than ever to make the switch to a renewable energy source. It's not something I can afford right now, but definitely something I plan on looking into once I can. How about you?
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