The steady decline in solar photovoltaic system costs is helping solar electricity become cheaper than electricity from new nuclear power plants. In a recent report titled “Solar and Nuclear Costs – The Historic Crossover (1), Dr. John O Blackburn and Sam Cunningham of Duke University makes a strong case for utilities to adopt a distributed model of electricity generation. The study indicates that the cost of solar electricity is expected to reduce from 14 cents per kilowatt-hour in 2010 to 7.5 cents per kilowatt-hour in 2020 while nuclear-generated electricity will be 12-20 cents per kilowatt-hour. Moreover, rooftop solar plants can be installed in a few days whereas construction of a new nuclear plant can take up to 6 years.
Some solar critics argue that solar electricity is only affordable because of government tax benefits. While this may be true, nuclear also benefits from government aid – in the form of government backed insurance and loan guarantees. Meanwhile, the rapid cost decline of solar technology will help solar electricity reach grid parity by 2020. In contrast, nuclear power is yet to be cost competitive despite being operational for the last 40 years.
The power industry and the energy economy are undergoing a paradigm shift from a centralized power source to a more “distributed” power model. A 2007 report by the American Council for an Energy Efficient Economy (ACEEE) (2) shows that 77% of new energy service demand is met by energy efficiency. These energy efficiency gains and most of solar supply are located in residential homes. The combination of energy efficiency, wind generation, solar water heating and solar photovoltaic technology has challenged the traditional model of centralized power generation.
(2) ACEEE, “ A White Paper prepared for the Energy Efficient Finance Forum”