To make solar power a significant source of energy, it must generate electricity at a price comparable to existing peak power generation methods, and be available on a large scale. Both the technology and production volumes for solar photovoltaic (PV) panel manufacturing have made significant advancements over the last 5 years, making it an economically viable choice for peak energy needs.
Peak Economics
Solar PV generated electricity has a very different financial model than conventional fossil-fuel based peak energy generation. The upfront capital cost of solar farms is much higher than gas-powered peaker plants; the financing cost is also higher due to the perceived risk associated with renewable energy. But what is often overlooked is the cost and volatility of natural gas.
Even at average natural gas prices*, electricity from a solar farm built with Applied Materials’ SunFab panels would be price competitive with electricity from a natural gas peaker plant. If the natural gas price elevates, solar energy will not only be cheaper for peak energy needs, but also becomes a viable alternative for intermediate-load generation.
Timeline for Reaching Peak Parity
As shown in this chart, solar PV is already price competitive in areas with high peak electricity costs and consistently high levels of sunlight. At $3.50/watt today, power generated by a solar farm is already crossing over in Hawaii, California, New York, and Texas. This crossover will continue as the installed cost per watt of solar continues to decline, and existing peak energy sources such as natural gas face upward pressure on fuel costs.
Applied Materials provides high productivity solar panel production lines, scalable to gigawatt capacity. These lines are on track to drive installed cost to below $3/watt, which would make solar cost competitive for intermediate and peak generation in nearly 50% of the country.
Source: Barclay's Capital Research, Energy Information Administration (EIA), May 2009
