Lowering Energy Costs within Ten Years

September 29, 2008 Updated: April 12, 2012

Stepping away from the nightmare of high-energy prices is no longer a pipe dream. Two innovative Massachusetts Institute of Technology (MIT) professors, Daniel Nocera and Henry Dreyfus, developed groundbreaking, cheap solar energy storage systems that should be available to the public within three years.

“Because the system is simple to manufacture, the team believes that it could be implemented within three years – even added onto existing solar-panel system to increase their efficiency by 50 percent for minimal additional cost. That, in turn, would substantially reduce the cost of solar electricity,” said the researchers in a recent MIT press release.

The researchers piggybacked on a 1970s idea that was shelved due to insurmountable problems with attracting enough sunlight. Under this latest development, regular glass becomes a “high-tech solar concentrator,” according to the National Science Foundation.

Solar Energy Rising in Popularity in the U.S.

Ten percent of U.S. energy needs will be Solar generated by 2025, up from less than 1 percent in 2007, according to the recent “Utility Solar Assessment (USA) Study,” published by Clean Edge, Inc. and the Co-op America Foundation.

With rising energy costs and new innovative cost-reduction discoveries by solar industry research, it will take about 7 years for solar energy to be on equal footing with other energy sources and become a serious competitor.

Solar energy, produced by the present-day technology will decrease from 15-25 cents/kWh [kilowatt-hour] to between 8-14 cents/kWh by 2015 and 4-7 cents/kWh by 2025.

“Recent industry developments, particularly large-scale solar deployment plans announced by major utilities, support the price projections outlined in this report. As utilities and other scale up their solar efforts, they are reaching economies of scale unlike anything we’ve seen in the past,” the researchers claimed.

Investments essential to achieve the 10 percent 2025 goal is considered to be within reach and inexpensive when compared to the funds invested by utilities and energy producing industries. The study suggests that it would carry a total cost of between $450 billion and $560 billion, reading into an annual cost of between $26 billion and $33 billion. This annual cost is much lower than the $70 billion spent by utilities to built new power plants and distribution networks in 2007 alone, according to an estimate by the Edison Electric Institute.

Twelve American cities, among them Philadelphia Pa., Denver Colo., Houston Texas and Seattle Wash., were on the recent “Solar America Cities” awards list, a brainchild of the Bush Administration’s “Solar America Initiative.”

The program is implemented by the Department of Energy (DOE). Every winner will receive $200,000 ($2.4 million in total) towards installation of various solar-based energy systems. Additionally, the cities and solar related industries will invest around $12 million in the cities.

“These Solar America Cities aim to jumpstart integration of solar power and encourage other cities across the nation to follow suit…The innovative programs already underway in each city will help us [the Bush Administration] raise the bar of what’s possible, and will help cities and towns across America harness the tremendous potential of the sun,” said Samuel W. Bodman, secretary at DOE.

Think Tanks, Governments and Industry Experts Take on the Solar Energy Cause

With energy prices going through the roof, solar energy that was once seen too expensive, given a 15 to 20 year payback period, is gaining increased interest.

It will take no more than three to seven years before unsubsidized solar power will achieve cost parity with conventional energy, according to a recent McKinsey Quarterly report. McKinsey is a New York based think tank.

“But make no mistake! The sector is still in its infancy. Even if all of the forecast growth occurs, solar energy will represent only abut 3 to 6 percent of installed electricity generation capacity, or 1.5 to 3 percent of output in 2020,” according to the McKinsey article.

Solar energy producer have to become more cost effective to make solar energy a household word. McKinsey suggests that without solar energy products achieving greater efficiency, the industry will hobble along instead of taking off at greater speed.

The latest averages for a 10,000 kWh solar generating system is around $40,000. The out-of-pocket cost to the individual will be cut by more than half as U.S. state governments contribute about 50 percent of that cost through rebates, credits and tax breaks and Uncle Same up to $2,000, according to Kiplinger.com, a web based personal finance and business advisor.

The DOE allocated $13.7 million towards the development of solar energy technology products and technology to major U.S. Universities, including Arizona State University, California Institute of Technology, Pennsylvania State University, and Massachusetts Institute of Technology.

In 2007, the global market for certain solar photovoltaic (PV) [solar cell products that convert solar energy into electricity] products, increased by 62 percent over the prior year. Germany makes up 47 percent of the total increase and is the by far ahead of any other nation concerning solar energy system installations. The US and Japan are far behind with an increase of 8 percent in 2007.

In 2007, the PV industry earned over $17 billion and about eighty-four investors pumped $10 billion into the industry, according to a recent report “Marketbuzz 2008: Annual World Solar Photovoltaic Industry Report” by Solarbuzz, LLC, a global solar energy research and consulting company based in San Francisco.

McKinsey predicts that solar energy in areas with lots of sunlight will achieve competitive pricing with conventional and other types of energy systems by 2020. The cost for solar energy will fall to around 11 cents per kWh from today’s 30 cents.

Demand and installations of solar systems will increase by around30 to 35 percent annually, “requiring capital investments of more then $500 billion,” stipulated the McKinsey report.