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Solar is Cost-Competitive with Nuclear: Report

Posted in Movements, Research by Kate Archdeacon on August 24th, 2010

Source: Worldchanging

From “Scaling Up Solar: The Global Implications of a New Study that Says Solar Power Is Cost Competitive with Nuclear Power” by Olivia Boyd:

The sunshine of North Carolina, a state on America’s Atlantic seaboard, has long been a draw for tourists seeking a little southern warmth on the region’s beaches. But holiday companies are not the only ones trumpeting a good local deal. The price of the state’s solar-generated electricity has fallen so far that it is now cheaper than new nuclear power, according to a report published in July by researchers at the state’s Duke University. The authors say their figures indicate a “historic crossover” that significantly strengthens the case for investment in renewable energy – and weakens the arguments for large-scale, international nuclear development.

Solar power is usually branded as a clean but expensive energy source, incapable of competing on economic grounds with more established alternatives, such as nuclear. The outspoken pro-nuclear stance adopted by a raft of iconic environmental figures – James Lovelock, Stewart Brand, Patrick Moore – has helped to instill in policy making circles the sense that this is the only power source that can restructure our energy supply at the pace, scale and price required by the pressures of rapid climate change. This study, which was co-authored by former chair of Duke University’s economics department John Blackburn and commissioned by NC Warn, a clean-energy NGO with a firm anti-nuclear bent, challenges that view. “This report should end the argument for risking billions of public dollars on new nuclear projects,” says Jim Warren, NC Warn director.

The paper states that commercial-scale solar developers in North Carolina are already offering utilities electricity at 14 cents or less per kilowatt hour. Meanwhile, two power companies – Duke Energy and Progress Energy – are pushing ahead with plans for local nuclear plants that, at current estimates, would generate electricity at the higher rate of 14 to 18 cents per kilowatt-hour.

The “crossover” is largely thanks to a marked decline in the costs of solar photovoltaic (PV) systems seen over the past decade. The study cites figures [PDF] from the Lawrence Berkeley National Laboratory indicating that the cost of solar PV fell from US$12 (81 yuan) per installed watt in 1998 to US$8 (54 yuan) in 2008, on average – a one third drop in 10 years. In 2008 and 2009, costs fell even more rapidly, bringing the 12-year fall to 50%. Meanwhile, the expense of nuclear has ballooned. The estimated cost of construction in the United States at the start of the nuclear renaissance was around US$2 billion (13.6 billion yuan) per reactor. It now stands at around US$10 billion (67.8 billion yuan).

The Duke University research is, of course, limited in geographical focus – the 14 cents figure, which is net of public subsidies, is specific to the North Carolinian regulatory context, where (as in many places) tax benefits and incentive payments for solar electricity help lower costs to customers. But the authors argue that solar is expected to be cost-competitive without subsidies within the decade. And their overall message – that solar and other renewables represent increasingly good value compared to alternatives – is not unique. Jeremy Leggett, the founder of the UK’s largest solar company, Solarcentury, predicts “even cloudy Britain” will reach residential grid parity between solar and fossil-fuel power within five years, while Google is claiming breakthroughs in its bid to make renewables cheaper than coal.

And the pace of development on the ground is startling. At the end of 2009, total worldwide solar installations passed the 22,000-megawatt mark. During that year, more than 7,000 megawatts of solar-generating capacity had been built globally, half of which was in Germany.

“When you begin seeing solar production on this level, it starts making a significant difference. It’s no longer a niche thing,” says Antony Froggatt, senior research fellow in the energy, environment and development program at UK think-tank Chatham House. “It’s very clear that the learning curve for solar is very fast. We are seeing very, very rapid production and economy of scale is clearly crucial.”

Blackburn and his co-author, Sam Cunningham, argue that the strengthening renewables sector, combined with the perceived financial risks of new nuclear, is influencing investor behaviour: “Very few other states [American states other than North Carolina] are still seriously considering new nuclear plants. Some have canceled projects, citing continually rising costs with little sign of progress toward commencing construction. Many states with competitive electricity markets are developing their clean energy systems as rapidly as possible.”

Read the full article by Olivia Boyd.

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