AllianceBernstein analysts Catherine Wood and Brett Winton believe the day when solar power can achieve grid parity, or be cost competitive without subsidies, may never arrive.
Writing on the firm’s blog, Winton said the per-unit generation cost would have to come down by more than two-thirds, which would only be possible through massive expansion.
We estimate that the cost of an installed solar power panel would have to fall from about $4.40 per watt today to $1.40 per watt to become cost competitive with a newly built natural gas–fired plant, assuming the gas plant had to pay $50 per metric ton for carbon emissions. It would have to fall to about $1.10 per watt to accommodate the cost of energy storage. But to get to that price, massive economies of scale would be required.
To reach 100 per cent of electricity demand in 2025, approximately 10 million megawatts would be needed, or about enough solar panels to cover all of Vermont and New Hampshire.
But the costs to achieve grid parity would be astronomical.
“Society would have to pay out trillions of dollars to get there,” they write.
They point to Germany’s experience:
I think not. Much of the money is likely to be wasted. Germany, for example, has subsidized the solar industry to the tune of $50 billion, yet it only gets 6% of its electricity from solar power. The marginal tax dollar would find a better home in the research labs of universities, where fundamental technological breakthroughs are more likely to yield a big increase in efficiency and corresponding decline in price.
That doesn’t mean there’s no place for solar in the world:
…Solar power may indeed be the cheapest way to provide base electric power in rural India, or in parts of Africa devoid of infrastructure. Even in select markets with developed infrastructure, a small amount of solar power may prove valuable to provide electricity during the hottest parts of the day.
For areas that currently lack electricity infrastructure, solar might be viable. But for the developed world, forget about it.