For decades, solar energy has been touted as an alternative power source. Increasingly, however, solar is standing toe to toe with traditional power sources as a viable, cost-effective option for electricity.
When solar energy burst onto the scene in the 1980s, nobody was making an economic case for including it in America’s utility electric fleet. The argument in favor of solar was primarily environmental. Photovoltaic (PV) panels generate energy without carbon emissions and without the constant need for fuel. Since 1998, however, the cost of panels has fallen by about 8% every year. Now, it is reaching what is known as ‘grid parity,’ which means that the electricity produced by PV is cost-competitive on a per-kilowatt basis with electricity from natural gas or coal plants. At the point of grid parity, advocates of the technology can use both pure cost analysis and environmental benefits to make the case. Recently, the EPA released its Clean Power Plan, which is likely to define the environmental legacy of the Obama administration. The plan calls for a nationwide 30% reduction in carbon emissions by 2030. While environmental benefits certainly were part of the motivation behind the plan, feasibility largely hinges on the affordability of renewable energy technology.
Traditionally, electric utilities in the United States are vertically integrated monopolies. Vertical integration means one company produces and delivers a product to consumers. Solar energy, however, is already breaking that vertical model up. While it doesn’t make sense for everyone to have their own coal plant, photovoltaic electricity gives every American the opportunity to produce their own power. This has come to be known as energy democratization. Today, people have an unprecedented level of choice. With this choice, many homeowners are crunching the numbers and realizing that an investment in their own electric production can save them thousands over the life of the system.
It’s not only individuals taking advantage of declining prices on their own rooftops. Utility companies themselves have seen the writing on the wall and begun to invest in large-scale solar systems. There are now several solar power farms located throughout the United States. They are strategically constructed in areas with high solar resources, such as the Mojave Desert. The largest of these farms have a production capacity upwards of 500 megawatts.
Americans are increasingly aware of the need for a clean energy future and the economic advantages of producing electricity at home. Solar energy is coming into its own as the economic and environmental choice of the future.