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China Laughed When It Saw How Cheap Solar Could Be [View all]
From Mike Sankowski, who's thesis on the Death Spiral of the Utilities from last December has, in half a year, become the conventional wisdom, another very bold prediction, this time re China:
Do you remember when Dr. Evil was going to hold the world ransom for $1,000,000?
This is what we are facing today in Solar – the Dr. Evil ultimatum. The cost to get Solar to coal parity is going to be laughably tiny.
The cost sounds like a lot of money to old people, or to people who haven’t thought it through, or to people who do not know how large world GDP is today and how much we spend on energy already.
But the cost is tiny, and China laughed when they found out the cost.
...
It turns out Solar will be cheaper than coal for China very, very soon. SunTech estimates Solar will be cost competitive with coal power in China by 2016 and 2017 at the latest. This is in line with what people expect for Solar parity in the United States, given the cost of coal based power.
Still, let’s assume SunTech exaggerating, and the time for Solar/coal parity is really 2018.
Both parts of this assumption are reasonable. Suntech is probably exaggerating the time for Solar to get cost competitive with coal. But it can’t be more than a year or two, because electricity is so much more expensive in China than it is in the United States.
...
Coal power is expensive in China, simply because they need to import coal from Australia. China can’t make the cost of coal lower with cheap wages.
Industrial users in China should pay about 80% more for electricity as similar users do here in the United States. So if unsubsidized Solar is about double the cost of coal here – which we know was true a lifetime year ago – then Solar must be close to coal parity in China today.
...
Many people are calling for thousands of coal plants to be built in China in the years from 2020 to 2030. However, if you think about it from the perspective of how China has acted in the past, this does not make much sense. China has shown again and again it is willing to make what appears to be insane levels of investment to achieve goals.
I contend given the current levels of pollution in China, paying a modest premium for energy is completely worth it to them. If Solar ends up being the same cost as coal in just a few years, China will shift over to Solar power in an astonishing way. They will just stop building coal plants, and build an incredible amount of Solar plants instead.
Look at what China did in Shanghai. The city was entirely transformed in 20 years. China put up the equivalent of Chicago in 20 years.
Why would their response to cheap, clean energy be different? It won’t.
This is what we are facing today in Solar – the Dr. Evil ultimatum. The cost to get Solar to coal parity is going to be laughably tiny.
The cost sounds like a lot of money to old people, or to people who haven’t thought it through, or to people who do not know how large world GDP is today and how much we spend on energy already.
But the cost is tiny, and China laughed when they found out the cost.
...
It turns out Solar will be cheaper than coal for China very, very soon. SunTech estimates Solar will be cost competitive with coal power in China by 2016 and 2017 at the latest. This is in line with what people expect for Solar parity in the United States, given the cost of coal based power.
Still, let’s assume SunTech exaggerating, and the time for Solar/coal parity is really 2018.
Both parts of this assumption are reasonable. Suntech is probably exaggerating the time for Solar to get cost competitive with coal. But it can’t be more than a year or two, because electricity is so much more expensive in China than it is in the United States.
...
Coal power is expensive in China, simply because they need to import coal from Australia. China can’t make the cost of coal lower with cheap wages.
Industrial users in China should pay about 80% more for electricity as similar users do here in the United States. So if unsubsidized Solar is about double the cost of coal here – which we know was true a lifetime year ago – then Solar must be close to coal parity in China today.
...
Many people are calling for thousands of coal plants to be built in China in the years from 2020 to 2030. However, if you think about it from the perspective of how China has acted in the past, this does not make much sense. China has shown again and again it is willing to make what appears to be insane levels of investment to achieve goals.
I contend given the current levels of pollution in China, paying a modest premium for energy is completely worth it to them. If Solar ends up being the same cost as coal in just a few years, China will shift over to Solar power in an astonishing way. They will just stop building coal plants, and build an incredible amount of Solar plants instead.
Look at what China did in Shanghai. The city was entirely transformed in 20 years. China put up the equivalent of Chicago in 20 years.
Why would their response to cheap, clean energy be different? It won’t.
Full article, well worth reading. There's a lot more there: http://www.businessinsider.com/china-laughed-when-it-saw-how-cheap-solar-could-be-2014-6
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