In 2016, for the first time, the U. S. added more electricity-generating capacity from solar power plants than from natural gas, wind, or any other source of energy. The total of 9.5 gigawatts (GW) of solar generating capacity is triple the amount added in 2015 and is enough to provide electricity for 1.8 million homes. Here are the data as reported to the U. S. Energy Information Administration. (The apparent surge in new generating capacity in December is due to respondents’ habit of waiting until the end of the year to report new installations.)
The top five states adding new solar are California (3.9 GW), North Carolina (1.1 GW) Nevada (.9 GW), Texas (.7 GW) and Georgia (.7 GW). These data are for utility-scale photovoltaic solar installations and do not include distributed generation (rooftop solar). In addition to solar, 8 GW of natural gas and 6.8 GW of wind power were added. No new coal-fired plants were built last year.
Before we get too excited about this, it should be noted that solar power still provides only 1% of the nation’s electric power, a total of 35.8 GW.
What accounts for this rapid solar growth? It’s not federal investment tax credits, which remained at 30%, the same as in previous years. The explanation is the rapid decline in the cost of photovoltaic cells, which has dropped from $77/watt in 1977 to $.26/watt in 2016.
It’s difficult to get a handle on the cost of various sources of power, since it varies from one country to another and depends on whether government subsidies are included. The world’s average cost of solar is now the same or less than any other energy source except wind. (See the chart below.)
Levelized cost of energy refers to the net cost to install an energy system divided by its expected lifetime output. Levelized cost data typically include subsidies. The average levelized cost of solar had dropped to $600 per megawatt-hour (MWh) a decade ago and is now at or below $100/MWh, about the same as coal and natural gas. In other words, solar has reached grid parity with fossil fuels. The cost of land-based wind power is about $50/MWh.
The above figures are for the average of all countries. However, a recent Bloomberg report claims that for 58 emerging economies, including China, India and Brazil, the cost of new solar has dropped below that of wind. The difference may be due to the location of these emerging countries, which are nearer to the equator than wealthier countries, and their need to add new capacity quickly, which creates economies of scale. It had been anticipated for some time that solar would eventually be cheaper than wind power, but few analysts expected it to happen this fast.
The problem is subsidies. According to the International Energy Agency, fossil fuels received $493 billion in subsidies worldwide in 2014, the most recent year for which figures are available. This is more than four times the subsidies received by renewables. On a level playing field, there would be little reason to add anything but solar or wind power.
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