Utilities may be slow to enter the residential solar industry, but their foray into grid scale solar power is substantial. This is primarily due to the fact that solar power is cheaper than natural gas at this level.
Data from a recent report from the Lawrence Berkeley National Laboratory shows that electricity from less expensive solar plants will be sold by 2021. While the plants and the power might not be sold for a few years, the pricing is set. Power from solar plants will be sold at $42.1 per megawatt hour. On the other hand, natural gas costs $48.1 per megawatt hour. These costs, from the wholesale residential solar perspective, translates to about 4 cents per kilowatt hour.
Utility-scale solar has come a long way in the past 10 years. There is now 31 times more installed solar then there was a decade ago. As astonishing as this may initially sound, the fact remains that the solar industry is still in its very early stages of growth.
What’s special about this particular point in time is that it is concerned with a concept called grid parity. At the utility scale, solar has finally achieved (and surpassed) grid parity with fossil fuels. This means that the cost of solar has equaled and is now cheaper than coal and natural gas. The implications of this is that we can expect an explosion of solar power growth in the coming years.
The big picture here is that we still need further massive solar growth at all levels – utility, commercial, and residential. It’s encouraging to know that solar is now less expensive than other sources of energy at every scale.
It’s been written many times and in many places on this site that, as of 2015 the price for affordable residential solar power is approximately 8 cents per kilowatt hour. Earlier in this article, 4 cents per kilowatt hour was mentioned for utility scale solar. Why twice as much for residential solar? This is mainly due to the cost advantages of the economies of scale – as the size of the solar project increases, the costs decrease to a certain extent.
Unfortunately, there are still many homeowners who end up paying four times as much as the cost of utility-scale solar, or twice as much as the true cost of residential solar power. This is the price that solar leasing companies charge their customers. Not only are they paying way too much, but they remain renters of electricity instead of owners.
Power companies should be obligated to pursue investments in solar at every scale. In addition to investing in grid-scale power purchase agreements, they need to also offer commercial and residential solutions. However, smart homeowners will continue to opt for ownership as the benefits far outweigh leasing from a utility or other large solar company.
So here’s to the continued solar power revolution in all of its various forms. Eventually the scales will be tipped far enough in favor of solar to even dissuade fossil fuel interests from continuing with business as usual.
It’s looking like a solar powered future from here.
