In an article entitled “The Dirty Secret of Climate Change” Craig Comstock made the point that alternate energy is more expensive than fossil fuels and until something is done about that, we will continue producing the carbon that is causing climate change.
He is correct. However, the cost of solar energy has been dropping over the last few years. Solar does not have parity with gas yet, but prices are going the right direction.
According to a study by the Colorado based National Renewal Energy Lab (NREL) and the Lawrence Berkley National Laboratory (LBNL), the per/watt cost of installed solar energy dropped 11% to 14%, between 2010 and 2011, depending on the size of the system. This beat the 5%-7% average annual decline between 1998 and 2011.
The report followed 150,000 solar installations in 2011 and found that the median reported price was $6.13/W for residential and small commercial systems 10 kW capacity or less, and $4.87/W for commercial systems larger than 100 kW. The capacity-weighted average reported for installed price of utility-scale PV systems completed in 2011 was $3.42/W.
These costs are roughly half what they were in 1998, and most of that drop occurred in the last two years. In 1998, residential solar cost just under $12/W compared to $6.13 in 2011. Commercial solar systems cost about $9/W in 1998 compared to $4.87 now.
NREL and LBNL say that all indications are that prices in 2012 are on track to resemble the declines in 2011.
Despite that good news, however, solar is still competing with natural gas which has an artificially low cost of about half of solar. This is the “dirty secret” in Comstock’s article. The low price of gas is not really a free market price. It is an artificial price set in large part by government policy.
For one thing, U.S. natural gas is heavily subsidized by the government. Taxpayers shell out $4 billion a year in subsidies for the 100-year-old gas, oil, and coal industries. This is on top of the billions in local government tax breaks and subsidies to gas and oil companies.
Secondly, numbers are skewed in the way we calculate the price of gas or coal versus solar in that both have a production cost, however, once a solar system is installed, the on-going cost of production of electricity is near zero whereas every BTU of natural gas has a production and distribution cost. This means over time, the high installed-cost of solar diminishes whereas the cost of gas is on-going—subject to future price changes. Those changes are likely to be higher because they are not sustainable at today’s level.
There is more to the story as Comstock’s wrote. There are other costs of fossil fuels that are not factored into the price, but they are paid by taxpayers and everyone. These are the environmental costs, health care costs, and infrastructure costs required to get the fossil fuels to market. Once a solar system is manufactured and delivered, it produces no carbon. Gas and coal, however, produce almost the same amount every day.
A balanced energy policy would assess a cost to all sources of energy based on the actual costs to society and government. If that were done, the tax would be much higher on fossil fuels than renewable energy. That would eliminate much of the disparity that exists in pricing today. Clearly, it would bring solar and other renewable to parity with gas.
The most common proposals to achieve this have been Cap and Trade and carbon tax proposals. They are dead on arrival in the oil-subsidized Congress. This is not likely to change until half of the coastal cities in the U.S are under water, or we get a new Congress.
Instead of a penalty for using carbon, which is equated as a “tax” maybe an incentive for not using carbon-producing fuels should be looked at. It may be easier to use the money saved from less pollution to incent consumers to use non-polluting energy than to charge customers more for carbon based electricity.
Meanwhile, spread the word on the dirty secret of climate change.
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