Guest Post by Willis Eschenbach
The “Annual Energy Outlook” for 2011 is just out from the US Energy Information Administration. The section called “Levelized Cost of New Generation Resources” looks at what are called the “levelized” costs of electric power from a variety of sources. Their study includes “renewable” sources like solar, although I’ve never found out exactly how they plan to renew the sun once it runs out. The EIA data in Figure 1 shows why solar will not be economically viable any time soon.
Figure 1. Levelized costs of the different ways of generating power, from the EIA. Blue bars show the capital costs for the system, while red bars are fuel, operations, and maintenance costs. Estimates are for power plants which would come on line in five years. Operation costs include fuel costs as appropriate. Background: HR diagram of stars in the star cluster M55
“Levelized cost” is a way to compare different electrical generation technologies. It is calculated by converting all of the capita costs and ongoing expenses for the project into current dollars, and dividing that by the amount of energy produced over the lifetime of the plant. For the mathematically inclined there’s a discussion of the various inputs and calculations here. Levelized cost is the all-up cost per kilowatt-hour of generated power. The levelized costs in Fig. 1 include transmission costs but not the costs of backup for intermittent sources.
So why is this chart such bad news for solar electricity? It’s bad news because it shows that solar won’t become cheap enough to be competitive in the open market any time in the near future. Here’s why.
Now, please don’t get me wrong about solar. I lived off the grid for three years on a houseboat with solar power in Fiji, collecting sunshine and drinking rainwater. I am a solar enthusiast and advocate, there are lots of places where it is the best option.
But not on the grid. It’s too expensive.
Yes, it’s true that the sunshine fuel is free. And the operations and maintenance is cheap, 2 cents a kilowatt-hour. And as backers are always claiming, it’s the only technology where the capital cost is falling rather than rising, as the price of solar cells drops.
But here’s the problem. Solar cell prices have already fallen so far that only about thirty percent or so of the cost of an industrial-sized solar power plant is solar cells. The rest is inverters, and wiring, and racks to hold the cells, and the control room and controls, and power conditioners, and clearing huge areas of land, and giant circuit breakers, and roads to access the cells, and the site office, and half a cent for the transmission lines from the remote locations, and labor to transport and install and wire up and connect and test all of the above, and …
That means that out of the twenty cents of capital costs for solar, only about six cents is panel costs. Let us suppose that at some future date solar panels become, as they say, “cheap as chips”. Suppose instead of six cents per kWh of produced power, they drop all the way down to the ridiculous price of one US penny, one cent per kilowatt-hour. Very unlikely in the next few decades, but let’s take best case. That would save five cents per kWh.
The problem is that instead of 22¢ per kWh, the whole solar electric system at that point would have a levelized cost of 17¢ per kWh … and that is still two and a half times the price of the least expensive option, an advanced combination cycle gas turbine.
Finally, this doesn’t include the fact that when you add an intermittent source like solar to an electrical grid, you have to add conventional power for backup as well. This is so you will be sure to still have power during the time when the sun doesn’t shine. Even if you never use it, the backup power will increase the cost of the solar installation by at least the capital cost of the gas plant, which is about two cents per kWh. That brings the levelized cost of solar, IF panels dropped to a levelized cost of only one penny per kWh, and IF the backup generation were never used, to 19¢ per kWh … and that’s way more than anything but offshore wind and solar thermal.
However, it gets worse from there. The cost of fuel for the gas advanced cycle power plant is only about 4 cents per kWh. So even if gas prices triple (which is extremely unlikely given the advent of fracking), the gas plant cost will still only be about 14¢ per kWh, which is still well below even the most wildly optimistic solar costs.
And that means that the dream of economically powering the grid with solar in the near future is just that—an unattainable dream. The idea that we are just helping solar get on its feet is not true. The claim that in the future solar electricity will be economical without subsidies is a chimera.
w.
PS—On a totally separate issue, I suspect that the maintenance costs for wind power are underestimated in the report, that in fact they are higher than the EIA folks assume. For example, both wind and water are free, and the EIA claims that wind and hydro have the same operation and maintenance cost of about one cent per kWh.
But with hydro (or almost any other conventional technology) you only need to maintain one really big generator on the ground.
With wind, on the other hand, to get the same amount of power you need to maintain dozens and dozens of still plenty big separate generators, which are stuck way up at the top of really tall separate towers … and also have huge, hundred-foot (30 m) propeller blades whipping around in the sky. You can imagine the trek you’ll have when you forget to bring the size #2 Torx head screwdriver …
Do you really think those two systems, both feeding the same amount of power into the grid, would cost the same to maintain? Check out the windfarms and count how many of the fans are not turning at any given time …
My first time using tags so I hope I did this right…
Actually, Wikipedia is out of date. The subsidy has been 80.2¢ for the past two years and now it’s poised to drop in response to private sector competition driving the install costs down over that same period. And yes, I am boasting a 43% drop in installed costs over two years. Keep in mind that without solar, the province would be forced to build peaking capacity for a relatively small number of summer days or import power from another jurisdiction. A plant or transmission corridor that is used 20 or 30 days a year for a few hours each day has got to be expensive per kWh.
The cost of ownership over the useful life of the product is a better oranges to oranges comparison. Just because your nuclear plant needs a major overhaul costing billions of dollars at the thirty year mark doesn’t mean you can impose its limitations on my choice of technology. Speaking of costs, the CBO says the average nuclear plant built in America is 207% over budget (table 2-1). Triple!
I think I mentioned inverter warranties, implying that they may not need replacing. In the past four years inverter warranties have increased almost linearly. Now a 25 year warranty is leading the way. My car is warranted for 3-5 years but lasts 10-15 or more. My TV is warranted for a year or two but lasts 10-20. Lastly, there are virtually no O&M costs on a typical residential system so the 2¢ per kWh you allocate for that should cover the new inverter(s) if they are even needed.
I did mention that solar was “knocking on coal’s door”, but either way coal or gas are both finite resources that will run out one day. I hope we have a solution ready for when we do. Which leads me to the subsidies you mention. No one says it doesn’t work without the subsidies, yet. As mentioned before, the idea of the subsidies is to give the industry the push it needs to become self sufficient.
You obviously missed my post on the impact to rate payers. The overall impact is insignificant but the long term benefits to society will be profound. When those first, most highly subsidized contracts start to expire we will look back at an industry that will have made huge technological advances that brought them well below the cost of centrally generated fossil fuel electricity.
And since you mentioned it, how about we talk about the insurance subsidy for the nuclear industry. By underwriting the liability of nuclear we, the rate payers, are not having to pay the billions a nuclear plant would have to pass on if they had to carry the appropriate level of liability insurance. Most of the people I talk to say that residential solar panels are covered under your existing homeowner’s policy at no extra cost.
MrC
Mr C
Tou write: “Actually, Wikipedia is out of date. The subsidy has been 80.2¢ for the past two years and now it’s poised to drop in response to private sector competition driving the install costs down over that same period. And yes, I am boasting a 43% drop in installed costs over two years. Keep in mind that without solar, the province would be forced to build peaking capacity for a relatively small number of summer days or import power from another jurisdiction. A plant or transmission corridor that is used 20 or 30 days a year for a few hours each day has got to be expensive per kWh.”
isn’t that what your solar power provides….subsidised power for a relatively small number of days. Or else I am completely missing the point of your content-free post
Everett writes “TimTheToolMan doesn’t seem to have much faith in the free market. As fossil fuel prices rise, alternate energy sources naturally begin to take over as the price becomes competitive.”
Thats fine if there is no R&D requred and no long lead times with infrastructural changes. It’d be fine if we were talking about the new iPod or something that is a want and not a need. The fact is there has been massive subsidy into renewal energy sources and we’re still not at the point where we can properly transition to them although we’re a lot closer than if we’d spent nothing to this point.
IMO your opinion of the free market is naive in that the market works well with supply and demand where both are flexible. When demand exists and supply necessarily drops off then there is a bit of a problem. When the only way to overcome that problem is through more supply then you have a problem that can only increase.
And when the supply is of a resource that is necessary for survival then combined with human nature, that becomes a major problem.
“Lawrence Poe says:
December 3, 2011 at 6:28 am
Old Construction Worker says, “This is why the government wants wind and solar. It puts puts more people to work even though it is an inefficient use of capital.”
Sir, I stand corrected. LOL
I completely disagree with this statement. The complete lifecycle environmental impacts of solar are completely ignored from the mining of the materials required to manufacture them, the building of them, and what are we going to do in 10-20 years time when they all start failing? There is going to be a constant supply of dead solar panels. They can’t be recycled, the cells must be thrown away.
Besides, at best a solar installation provides benefit only during the day. In most of the country they provide little benefit in winter because the sun angle is too low and the days are too short.
You can cheerlead all you want, solar DOES make sense in very isolated locations where mains problem is not available or to provide domestic lighting or some other insignificant use of power but they will never provide power at industrial scale. Neither will windmills. How many windmills does it take to power one single electric arc steel mill 24x7x365? Heck, you can’t power ANYTHING reliably 24x7x365 with wind or with solar without even more environmental impact from such things as batteries for storage in off-peak generation times.
I’m sorry, solar is absolutely no substitute. We have two sources of power for industry: nuclear and fossil and at some point in the next century, we will be down to one, nuclear.
Solar on any significant scale is a pipedream and it always will be except for certain niche applications. It is an absolute waste of money for base power generation. It is not environmentally friendly and it never pays back without a lot of subsidy. Same with wind. It just doesn’t work and there is no possible way for it to work. Anyone who has lived in an area that might be cloudy for weeks at a time can tell you that. The costs are simply not worth the benefit unless you assume that not using conventionally generated power is some sort of benefit and so the entire exercise in large scale wind and solar comes down to convincing one’s self that conventional energy use is somehow “bad”. It isn’t.
Put solar in the desert and it destroys habitat. Put it on rooftops and it is destroyed by hail, wind, etc. Sure, it might work great in Phoenix but it makes a lot less sense in places with more than 200 days of heavy cloud cover per year (Portland, OR; Elkins, WV; Binghamton NY; Kalispell, MT and thousands of other communities). And he is correct, it is a very regressive tax.
I would call for the elimination of all subsidies for wind and solar in order to spur development. Subsidies hamper increases in efficiency by making the current level of efficiency cost competitive so there is no need to improve. But in any case, it is a stupid idea except for corner cases or as a hobby project. It makes no economic sense whatsoever.
Lawrence and Old Construction worker. The facts are these, for every 1 job in new energy supplies, ie. Solar and Wind, has cost 2.2 jobs in conventional energy supplies. Some jobs security?. Wind turbine manufacturers are closing, solar panels are in dire trouble too, and people are losing jobs. It is cheaper to replace a wind turbine than mend it. And solar panels sometimes don’t last the 25 year distance they are supposed to do. After 5 years, you are up for the cost of repairing them. And there again, they are replaced at hire cost, not repaired. They still need back up electricity, those that signed up for subsidies before a certain date, get 60 cents per kwatt or equivalent. Who are the biggest wind turbine and solar panel manufacturers
China!
P.S. The gripe I have is some solar panel customers, say those that complain are not seeing the big picture. We are investing to save the environment and avoid climate change (oh yeah), not the money we get back. Just as well, because the cost will outweigh all environmental benefits,
as they won’t do a thing to change the climate. Dream on solar guardians. Without subsidies
the solar and wind industry will not exist.
Catcracking……….
I am not sure if anyone answered your question (real estate taxes and self generation improvements)-
I live in CA, and in my state the legislature wanted to support self generation so they passed a law that excludes the investment in self generation from real estate taxes. A recent post by Willis showed a graph/table noting that investors in large scale RE projects don’t have to pay real estate taxes on the capital costs for PV (the example may of been concentrating solar).
As an FYI I put my PV system in back in 2006 and it has been very robust output wise- my variation (%CV) in output in the sunny CA summers has been between 2% and 4%. My 6.12 kw system produces 9300 kwh per year (average of 5 years production). The variation in my systems output in the winter months has been a lot larger (17% to 25%) then my experience in the summer. This winter time variation in output is directly related to how much snow I get at my home an how cloudy/rainy the month has been. My system keeps my marginal usage from PG&E to Tier 1 or 2 prices most of the time. For PG&E their current residential prices (e-1 rate schedule- http://www.pge.com/tariffs/electric.shtml ) are- Tier 1= 12.2 cents/kwh, Tier 2= 13.9, Tier 3= 29.3.0 and tier 4 and 5= 33 .3 cents/kwh. Essentially my system offsets what would of been my Tier 3, 4 and 5 usage from PG&E (Tier 5 prices were 50 cents a kwh a few years back by the way).
At the moment the baseline usage quantities (the amount kwh that you can use from PG&E at Tier 1 prices) is set up so that most individuals fall into Tier 3 usage so their marginal costs are 30 cents. Earlier this year PG&E reduced the baseline quantities by 10%.
TTTM says:
“When demand exists and supply necessarily drops off then there is a bit of a problem.”
I agree with that. But in this case the problem is artificially created. There are enormous reserves of coal, and huge reserves of oil under the continental shelf, but the Administration will not even allow exploration, much less extraction in the red zones. Why not?? China is drilling only thirty miles off our coast, partnered with Cuba. The U.S. has the safest drilling record despite occasional accidents. Who are we going to sue, if and when Chinese drilling causes a spill?
The government is distorting the free market to appease the enviro crowd by drastically limiting the available supply, and the result of that bad attitude is becoming disastrous to the average person. The price of a barrel of oil is at least double what it would be if the supply wasn’t artificially limited. The problem is government, not the free market.
Two years ago I taught a science camp on power generation. I had to be honest with the students after I saw the numbers. I calculated the cost of outfitting my home with a modest array of solar panels. Back of the envelope calculations showed that it would take nearly 50 years to break even without subsidies. Of course by that time part (most?) of the system would also require replacement at additional cost.
Here is the poster I designed to compare the scale of power generation from various sources @ur momisugly http://scienceetcetera.blogspot.com/p/energy.html
How many solar cells would I need in order to provide all of the electricity that my house needs? See http://tlc.howstuffworks.com/home/question418.htm
diogenes,
Based on your characterization of my post, yes, you are completely missing the point. You must have gone to the socialist school.
Solar power provides a relatively predictable amount of power over the course of a year. If it didn’t, no one would build, buy or finance solar. The peaking/transmission that I mentioned in my above post is primarily built to service the summer air conditioning demand, something that solar can do quite well.
With enough installed solar we can eliminate the peaking plant and also slow our use of finite fossil fuels.
MrC
Crispin in Waterloo says:
December 3, 2011 at 7:14 am
Solar thermal can store process heat, although not all that much, a day or so. It still needs backup.
No, in this context “solar thermal” just means the generation of electricity by using the heat of the sun rather than photovoltaics.
w.
At what point should investment priority be given to improving the efficiency of DC household appliances and energy storage, bringing the total cost for decentralized solar power down. At a glance, using Willis’ numbers it would seem a 10% improvement in compressors and fan performance would make more sense then squeezing panels a bit more. Additionally, a standard for household DC, receptacles, etc. would help.
McCunnackstan, do you believe that millions of years of coal resources will be used up when?
And interesting point though. Hydro electric won’t be used up. Nuclear won’t be either. But I thought that clean or green energy was being encouraged, even if it is more expensive, especially to heat houses in cold weather, to save the planet? Cut down carbon emissions, that are controlling our climate? And then tax it and sell carbon credits so some manufacturers will have to pay to produce electricity, mine, drive cars. Mixed messages here I think. If it works well why change it. If it doesn’t work too well, why invest in a white elephant. If another ice age does come in the next 50 years, we will have to invent heat banks to store warmth, and use gas to
heat our food, or a barbeque type oven.
TimTheToolMan says:
December 3, 2011 at 5:04 pm
“IMO your opinion of the free market is naive in that the market works well with supply and demand where both are flexible. When demand exists and supply necessarily drops off then there is a bit of a problem. When the only way to overcome that problem is through more supply then you have a problem that can only increase.”
That’s a straw man. Energy demand is flexible.
Tom Fuller says:
December 3, 2011 at 7:56 am
Tom, always good to hear from you.
1. I don’t know what you mean by “replace” vs. “complement”. If I cook with electricity five days a week and in a solar oven two days a week, does the solar oven “replace” gas, or does it “complement” gas? Your distinction is unclear.
2. Why on earth would you want to replace fuel costing 6¢ / kWh with fuel costing ~ 22¢ / kWh, whether all of it or just 25-30%?
Call me back when solar gets competitive with gas combined cycle due to “price decreases due to innovation”. Until then it’s just wishful thinking.
Panels refuse to die, but they definitely degrade, disconnect, and get dirty, and often much quicker than we’d like. Inverters refuse to degrade, but they definitely die. Willis’s Rule says that everything costs more and takes longer, even when you take Willis’s Rule into account …
“Free fuel” means nothing when the equipment to harvest it costs 22¢ / kWh.
More to the point, I love the idea of “the number of homes for which solar is appropriate will increase. At present that number would be ZERO if we used actual generation costs … except of course that PGE has jacked the electricity rates so high that for some of the rich solar is appropriate (at least if “appropriate” is defined as “makes money for the rich”).
I fail to see how subsidizing the rich homeowner is “appropriate” in any sense of the word …
Not true and already demonstrably not true. We’re already (in CA) paying huge subsidies so the wealthy liberals can assuage their green guilt by using solar to power the AC on their McMansions. That might be OK for you, but for me, it sucks …
w.
A few things that have not been mentioned.
Where are most of the solar panels manufactured?
China.
Why not in the US?
Because it is too expensive to make them here.
Why?
Because it takes a lot of power to manufacture these things, and the power in the US is too expensive because we have mandated use of expensive solar power.
China does not mandate solar power, or even much clean power, thus, they can use lots of dirty cheap coal power to make these panels.
If solar were so good, the Chinese would manufacture the panels, then install them in China, then use the power the panels produce to manufacture more panels.
They do not, coal is the only power cheap and available enough to allow them to make these things.
Thus we see that China knows that solar power is no good for actual power generation, only for milking other countries out of money due to mandates and subsidies.
I imagine, now that the subsidies are drying up, that they will stop manufacturing these things, they certainly don’t need them except to sell to rubes like us.
Now that they have milked us dry they will move on to something else.
Second, it takes a lot of power to manufacture solar panels, How many years must that solar panel be around before it makes enough power that there is a net power gain? To really see how good power generation is, you would need to subtract the power it takes to make the generating plant from the amount of power it will produce over it’s lifetime. If one does that, one will see that solar produces a lot less power than we think it does, since it starts off by using a lot of power to even be manufactured. Considering that, just how much actual net, surplus power does solar actually produce anyway? Perhaps the reason we think it produces net, surplus power is only because we have shipped the power costs of making these things overseas were we do not have to use power to make power. If we did, we would probably still be running a net power deficit. What we are really doing here is importing dirty coal power from China, and converting it into solar power. However, we think we are being “green” because we do not have to actually see all that dirty smoke.
Thus, we see that having China manufacture our solar powers has the following effects:
It makes more total pollution worldwide, due to China needing many cheap dirty coal plants to have enough power to make these things.
We lose jobs, due to our more expensive power causing companies to move to China since it is too expensive to manufacture anything here.
When we lose jobs, the tax base goes down, and now we cannot afford the subsidies.
And since it takes a lot of power to manufacture solar panels, we don’t actually gain much net power anyway.
Wolfgang Flamme says:
December 3, 2011 at 1:55 pm
“Some input from Germany:
This is the Official Wind Power Monitoring Program website, formerly run by ISET Kassel, now part of Fraunhofer Research:”
Thanks Wolfgang – one diagram is VERY interesting. “Specific investment costs” (EUR/kW of installed nameplate capacity) are EXPLODING – probably the easy terrain is populated now and new installations become more and more expensive as they need to build in more difficult terrain…
http://windmonitor.iwes.fraunhofer.de/windwebdad/www_reisi_page_new.show_page?page_nr=475&lang=en
Bruce Stewart says:
December 3, 2011 at 8:36 am
I don’t understand how oil fits into your argument. Almost no electricity is made from oil. That’s why it doesn’t show up at all in Figure 1.
Additionally, there is an ongoing shift already happening from oil to natural gas. This is because we found out that gas is available in huge volumes by splitting underground rock (fracking). This gas will easily cover us for more than “a few decades”. This is perhaps the best energy news of the last 50 years, lots of clean-burning fuel. This good news has been studiously ignored by many people, including the President and hosts of folks who think they are “green”.
You desperately need to go start and run a business for a while, even if it is just a lemonade stand. Your idea that we can compare options by looking “only at the operating costs” is … well, it is certainly contrary to my advice as an experienced businessman.
That’s the beauty of the net present value aspect of levelized costs, it lets us compare capital and operating costs across the board.
Why on earth do we need a “low cost option” to natural gas? Natural gas IS the low cost option. If you want a second option, then nuclear. But for a third option, look up at the top. If you are agitated about carbon, coal with carbon capture and storage comes in at 10¢ a kilowatt-hour … why would I want your cockamamie scheme at twice that cost when a) we have coal and b) we can burn it cleanly?
Wouldn’t be any fun if we all agreed, would it?
Thanks,
w.
http://bjdurk.newsvine.com/_news/2010/12/30/5737860-meet-your-wind-developers-upc-first-wind-deepwater-wind-cape-wind-associates-llc-emi-ivpc
@Hultquist
Google Frack aquifer
I’m not normally a greenie weenie but it doesn’t take a rocket scientist to see that these processes are adverse to the environment. Much better to scrape coal off the surface and burn it than to pump chemicals under our acquifers to break the rocks above to free the gas. That is what fracking it.
Willis, I have a number of serious problems with the numbers and methodology that the EIA is dishing out here. Any competent estimate of costs is given in ranges, not fixed amounts. For example, two hydraulic sites in Ontario, as built without cost of capital. One produces power for approximately 2.5 cents, and the other if built will produce for a minimum of 18 cents even though it could put out at least 10 times as much power as the first. Hydraulic is totally dependent upon site conditions, water volume and head, let alone transmission distance. To give an absolute number is a very bad joke.
The same problem exists for fossil fuels as well. Generation costs will vary enormously with transportation distances. Again, these always have to be done with cost ranges, not absolute values. Just think how expensive it would be getting Powder River coal east of the Appalachians.
Now there’s also a bit of jiggery pokery going on with their wind costs as well. These will be based o.n the wind maps of the US geological survey. I know this because Canada uses essentially the same methodology. These wind estimates in now way reflect the actual capacity factors a wind turbine will produce; the government assessments cause these to be inflated by at least 50 per cent from what will be actually achieved.
You are quite right about maintenance costs being underestimated. The world’s largest off-shore wind fleet at Horn’s Reef has been a nightmare of huge cost overruns and very high outage rates. Salt water tends to eat fragile things like gear boxes and inverters.
Now as to solar, I’m not interested in theoretical calculations. I’m much more interested in actual contract amounts. In the case of Ontario, its electricity ratepayers will be paying 80 cents, that’s EIGHT-ZERO for every kWh of power out of its 1000 MW facility being built by Samsung. And there’s no T&D cost in this, as Hydro One has to forgo the connection charge.
Now as to nuclear, these costs can be inflated easily by the government of the day. Quite simply, a large proportion of nuclear costs are in the hands of government regulators, and they can drive it as high as they like. For example, German utilities collected a plant decommissioning fund. In the late 1990s, the German government levied an asset tax of about 10%, not on earnings but on the entire value of the fund. Decommisioning requirements were not reduced, so the utilities had to pick this up with rate hikes. And the governments of both Britain and the United States have been pilfering decommissioning funds for years and dumping them into general government revenue. Neither of these governments intends to repay nuclear utilities for the funds they have misappropriated, and so all of this will be absorbed as higher generation costs.
Finally there’s a great deal of misinformation about Denmark and its energy supply. If you look at their energy profile they claim that 30 per cent of their generating capacity is in “Renewables”. Then you have to look at what’s included as renewable generation. Yes, there’s wind. But the largest source of renewable generation in Denmark comes from their highly efficient waste incineration systems. Wind is barely over half Denmark’s renewable capacity and much less than 10% of total energy generated. Also, Denmark’s wind fleet is predominantly in Jutland on the west side of its transmission system. This means that primarily its wind supply goes to Germany. Denmark’s coal fired stations have maintained or increased their output every year regardless of wind turbine construction. I’ll say that again for the slow learners in the back; not one single Danish coal fired station has been closed or reduced its output as a result of wind turbine construction.
@Willis
Contrary to the above, it IS extremely likely that gas prices will triple or quadruple if a large-scale shift away from coal to gas occurs, which is why it is not happening with the present low gas prices.
Not true. If the price of gas goes up like that people won’t use it.
—-
Already happened at least once in the past ten years and they did stop using as much of it. The extra 3 cents/KW fuel adjustment charge from that price bubble has only recently fallen off my bill.
Willis
DOE’s SunShot program seeks to fund R&D to cut the costs of solar thermal power from 21 c/kWh to 6.6 c/kWh to be directly competitive with baseload power.
NREL provides SAM Solar Advisory Model to help calculate the efficiencies and costs for solar systems.
Willis, with respect to your post at 8:48, you are quite right. At $3.50, gas is the cheapest choice, but only now. In 2004-6 it was up around $7-8. This is the problem with gas; its extreme price volatility. And that volatility itself is a cost. During the winter of 2005-6, gas turbine operators in NEPOOL and NYPA were shutting down despite rise in winter demand, because the regulated price of electricity sank below the cost of the fuel. This is a typical feature of the breakup of the vertically integrated utilities in the 1990s, and there’s no getting away from this system vulnerability now.
You are right to point out the vast amounts of gas extractable with new technology. However, by and large we do not know what the extraction costs of this gas will be on a commercial scale. Will it be as cheap as conventional gas? Highly unlikely.
None of the above means that gas is not a highly useful fuel for electricity generation. What it means is that gas can provide supply within specific constraints, and those constraints largely exclude it from base load generation.
The unpleasant fact for far too many energy technology advocates is that every electricity system works best on a very large scale where you have a wide mix of sources supplying the system. Nuclear, coal and hydro for base and intermediate loads, and gas for peaking demand. Solar and wind provide nothing for system reliability on either a regional or a local basis and are only built because of government fiat. If a utility actually had a real choice based purely on economics and reliability, neither of them would ever be built in any quantity however small.