Nice Up To Date Cost Curves

Solar is a manufactured product and as such its cost declines as more is produced.  This occurs in a very predictable manner based upon the learning curve for the product.  Every doubling of cumulative production leads to a certain percent drop in the unit cost of production.  This was first observed with aircraft production and has proven to be true in many industries.  Flat panel displays are a great example that is near and dear to many.  In a paper from over a decade ago I predicted the current pricing of solar modules and pretty closely nailed the timing in this paper.  The paper used exponential growth trends in the industry combined with the well established learning curve for solar for its predictions.  This paper puts the growth in production into perspective.

This recent post from Clean Technica shows the cost curves for both solar and wind in 2013.  Notice that over a decade later still on track and consistent with the earlier projections.  I took the Bloomberg graphs they had and added other information, I recommend this post.

There are two important differences between renewables and extraction based power production.  The first is that the energy from renewables is free, with the power plant itself costing money.

The cost of renewables drops as you deploy more capacity because the production learning curve drops the price of the power plant where most of the cost is concentrated.  Fossil fuel costs will continue to rise because they are depleted over time and as they become scarce they increase in cost.

It is true that improvements in drilling and fracking technologies could extend the availability of fossil fuels but they are limited non-the-less and this just buys the world a bit more time to get it right with renewables.  If fossil fuels did not harm the environment a strong case could be made to let things play out with the current market structured as it is to favor extraction based power technologies.  However even then, in a free market country like ours we are philosophically bound to transition power production to something that more closely resembles a free market.  This can be done by internalizing some of the current external costs or by providing compensatory measures such as a carbon tax to provide an external balance to the fossil fuel power.

This entry was posted in Industry Growth, Markets and Subsidies, Path to a New Paradigm, Resources and Information and tagged , , , , , . Bookmark the permalink.

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