Study Shows Solar Can Provide 10% of US Needs by 2025

A new study released this month has projected that solar power could provide 10% of US electricity generation by the year 2025, with the active participation of electric utilities.

The study, the Utility Solar Assessment (USA) Study, was jointly produced by research firm Clean Edge and the non-profit organization Co-op America.  It also found that solar power is likely to reach cost parity with fossil fuel-based electricity in most of the USA within a decade.

The study, based on interviews with more than 30 solar, utility, financial and policy experts, can be downloaded at www.cleanedge.com and www.solarcatalyst.org.

Among the study’s findings are that the nation’s utilities will have to be actively involved in scaling solar power use up to significant levels.  The authors recognize that utilities have traditionally been more of an obstacle than a participant in the growth of solar power, for a variety of reasons.  Some of these reasons, such as historically poor cost comparisons with fossil fuel, are legitimate;  others, like the inability of utilities to embrace a distributed generation model with no ongoing fuel costs, are not.  However, utilities can benefit from the adoption of solar in many ways, according to the study

• As a hedge against volatile fossil fuel prices
• Because of solar’s growing capability as a cost-effective peak generation resource
• Because solar has no fuel costs and low maintenance costs compared to conventional fuel types, and because it will provide credits to the operator in any carbon-taxed economy
• Because solar is a widely available resource, suited to most parts of the country
• Because solar can ease congestion in areas where excessive demand has stressed the grid

The study also identified three key stakeholders in the process of upscaling solar, and essential actions for them all:

1. Regulators and Policy Makers.  These must pass long-term extensions of tax credits for those investing in clean energy, must establish open standards for solar interconnection, and must give utilities the ability to ‘rate-base’ solar power.
2. Solar Companies.  These must work to bring the cost of solar installations down to or below $3 per peak watt installed, by 2018.
3. Utilities.  These must optimize solar for peak generation and relief of grid congestion;  they must incorporate solar into the future ’smart’ grid;  and they must create new business models to make the new energy paradigm work.

Some utilities, the study noted, have taken a lead in adding large-scale solar power to its mix.  These include Southern California Edison (reported on in the April 2008 issue of Solar Citizen), Duke Energy and Pacific Gas & Electric.   At least some of the impetus for these moves has come from the need to meet State Renewable Portfolio Standards.

On the statistical side, the study noted:

• With the cost of solar power reducing and capital/fuel costs for fossil and nuclear plants rising, the crossover point is expected to occur in the US in 2015.
• Installed solar PV prices are expected to decline from 15-32 cents/kWh today to 8-18 cents/kWh in 2015 to 4-8 cents/kWh by 2025.
• To reach 10% solar by 2025 would cost between $450 billion and $560 billion, or an average of $26 billion to $33 billion per year.  (For comparison, utilities spent some $70 billion on new plants and infrastructure just in 2007).

Ron Pernick, Clean Edge cofounder and coauthor of the study, noted: “One of the big takeaways from this report is that, in many ways, the future of solar is in the hands of the utilities.”