One of the most talked about points in power sector is when the cost of solar power converges with conventional carbon power. At current pricing levels, solar photo-voltaic generators still cannot compete with thermal and other traditional generators. However, the dramatic reduction in solar panel prices in recent years has ensured that the convergence is not far away.
The graphic below shows that PV panel manufacturing costs have come down, from $60 a watt in the mid-1970's to $1.50 today, declining about 18% for every doubling of production. People often point to a "Moore's Law" in solar - meaning that for every cumulative doubling of manufacturing capacity, costs fall 20%.
A staggering ramp-up in installations around the world have driven an even greater increase in solar manufacturing. Underlining the speed with which solar panels can be manufactured and installed, in 2010, 17 GW of capacity was manufactured, shipped and installed, the equivalent of 17 nuclear plants in one year! GTM Research predicts we'll have 50 gigawatts of module global production capacity by end-2011.
The commercial convergence is more likely to happen earlier with distributed solar generation in rural and remote areas for lighting, agriculture pump sets etc. Even in cities, technologies other than flat-panel PVs, like concentrating parabolic troughs and multiple reflecting mirrors offer great potential to both generate electricity and heat for boiling water in large single-point installations like hotels, hospitals, airports etc.
Stephen Lacey has excellent pricing curves of solar with respect to peaking natural gas, nuclear, and thermal. He shows that solar PV panels will become competitive against even new coal plants in the next 6-8 years.