Is solar power cost effective? Not really.

Liberal New York Times columnist Paul Krugman recently wrote a column touting the “fact” that solar-generated electrical power is now cost-effective. Perhaps Krugman has not seen the chart below:

To further explain why Krugman is simply ignoring reality, check out this excellent post from Todd Myers of the Washington Policy Center (our sister think tank in Washington State). Myers will be traveling to New Mexico to discuss his new book “Eco Fads” in February of 2012.

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26 Replies to “Is solar power cost effective? Not really.”

  1. “Becoming” cost competitive and BEING cost competitive are two entirely different things. Solar PV is “becoming” cost competitive because the Chinese People’s Liberation Army is massively subsidizing their domestic industry in building PV panels which are then “dumped” into the US and European markets. That has forced Euro and US Solar producers to take action to remain viable in the market. Several US and European panel manufacturers have gone under already. Having “renewable” energy at the cost of subsidizing communism and child and slave labor is no bargain.
    Being in the solar industry and having watched the PV plant on our site (we also produce CSP components….yes, I’m in the business) be forced to lay off 25% of our workforce due to Chinese Red Army subsidized competition upsets me. We are losing our “green jobs” to slavers and child abusers. There’s your price of “cost competitive” renewable energy. Wake up and pay attention to what’s actually going on.

  2. The International Energy Agency has included hydroelectric power in its renewable energy market basket in order to make the cost per kwh of renewable energy competitive with coal and nuclear. That only works because the solar photovoltaic production is miniscule compared to hydroelectric.

    The numbers from the US DoE Annual Energy Outlook (,_2011_DOE_report.gif with details at show that for plants placed in production in 2016, the levelized cost per kwh favors coal over solar PV by almost two to one. Natural gas whips solar PV by over three to one. Even if the fossil fuel plants are hobbled with carbon capture and sequestration, PV is just not competitive.

    And of course, the Obama/Chu run DoE is “no friend” of fossil fuels.

    The numbers in the bar chart above may be a factor of two high for PV and quite low for the fossil fuels, but Krugman is just wrong on this.

  3. It is completely ironic that a technology comes along that liberates the individual from dependency on centralized electricity generation, yet must face the wrath of the libertarian movement. What?
    It does make sense if you understand that unfettered capitalism will degrade itself into defending its previous capital expenditures at the cost of its own future viability. This explains our local electric monopoly fighting to keep its old polluting coal fired power plants running despite the damage this policy does to utility’s own future.
    In a world that is not spending all of its creative talent defending obsolete capital expenditures, individuals using the sun for their needs would make total sense to the real libertarian.

    1. I am all for people using whatever solar power (or wind, or whatever) they want for their own personal power generation. That is not what libertarians or free-market advocates care about. It is the government subsidies that concern us. So, by all means, go “off the grid,” just don’t ask taxpayers to pay for it.

      1. The would-be free market is already distorted by government subsidies, import dumping, investor owned monopolies, and the right to pollute at no cost to the polluter. To be a free market advocate, you cannot pick one and ignore the rest.

        Without the whole basket of subsidies the above chart would look very different. Coal would not be cheap. Nuclear cannot even be costed. PV would look like a bargain.

        But Alas, it’s not a free market.

        1. Not sure what import dumping and investor owned monopolies have to do with anything. Dumping is not anti-free market necessarily. When funded by the government, it is simply unsustainable. Investor owned monopolies actually assist high-cost renewables because they don’t have to compete on price.

          The only argument you have is “externalities” like pollution, but you assume that a) these can be accurately measured and costs fairly allocated b) that “green” power is really green. Those solar panels and windmills didn’t appear out of nowhere. Mining took place and in the case of windmills, birds were shredded. I’m not saying that this is a total non-issue, but existing non-renewable fuel sources are already regulated heavily in terms of pollution. Those standards continue to rise.

          1. When government creates and sanctions a monopoly and sticks it right in the middle of commerce, this is a subsidy, a market distorting subsidy. Why does our would-be free market need electric utility monopolies? Picking winners? Must have centralized control of electricity?

            There are no externalities in the world where real problems are solved. We cannot pick and choose which variables to include when designing systems. Pollution is actually central to electricity generation. Measuring it is already happening. We just need to notice that is not okay to sacrifice everyone’s health for cheap electricity. This makes no sense, even to a free marketer.

          2. If you think RGF supports utility monopolies, you’re crazy. I’d love to see real deregulation. I’d also love to see externalities accurately measured and allocated. I’m not convinced this would shift the cost/benefit ratio in favor of “renewables.”

          3. It will be difficult for free-marketers to avoid calling externality measurement and allocation a form of regulation to be eliminated. The kind of regulation is important. How a company treats its shareholders versus its customers shouldn’t need regulation (but it apparently does). Pollution requires regulation because it brings harm to all, not just to the parties to the transaction.

  4. NM Pirg uses a similarly flawed pretense (as Mr. Krugman) but more ‘academic’ study showing that Solar Power is more cost effective than Nuclear. They make up hypothetical/supposed costs to the energy we are already using and fail to put out realistic numbers for solar. In fact in the NM PIRG paper, they listed one of the ‘hidden’ costs for nuclear power as GOVT. BACKED LOANS!!!! Of course in their comparisons they failed to mention those sort of loans also existed for solar…

  5. One only has to do the math to see what a hox solar energy is. The average solar power power density in the U.S. is onl 2kw per sq Meter! That is at 100% effenciency.
    Subtract from that the poor efficency (higer effenciencies are obtained by using larger collectors and focusing to a smaller area like a mignifing glass but remember the 2 kw per meter limit), cloudy days, night, and the inefficiencies of storage systems (for cloudy days and night) and high maintenance (like a dirty window a dirty solar panel face is less light to be converted) and solar equates to poor power conversion. The only thing making solar the price that is are huge subsidities and tax breaks. We can use it to help (I augment my hot water heater with solar) but the power density is not there to compete with fossil hydro or nuclear.

  6. Although the point may be supported by the chart, one bar on this chart seems to make no sense, the one labeled “electric”. What is electrical power generation by “electric”?

  7. My current average cost per kwh in California is .31 cents. After installing PV my cost over 20 years will be .08 cents. Sound cost effective?
    How about the fact the system costs $89 per month. The system has eliminated my $450 per month bill. Sound like a good investment?
    This system saves me on average more than $350 per month from day one.
    Don’t try to complicate it with fictitious charts or graphs. The math is not that complicated.
    If it doesn’t make sense to you because you pay much less per kwh, don’t buy it. With the rates we pay in California, for most people it pays for itself.

    1. Yes, don’t confuse me with charts or graphs showing how much of the burden for YOUR solar is being paid by WE the taxpayer! And, unless you are completely off the grid, you benefit from the grid which is paid for by the rest of us utility rate payers.

  8. This is so stupid. Solar energy is very beneficial, and if this person would rather pollute the earth with fossil fuels, they don’t deserve to live here.

  9. If the energy and pollution costs of solar were negligible, there would be an argument for its use. Right now, although the panels themselves are relatively cheap, they still use more energy to manufacture than they produce in their lifetimes, and all this energy in reality comes from coal, burnt in Chinese power stations. Even with panels getting cheap, there is a major cost involved in labor to install them, unless you can do this yourself. They are also a great boon to roofers, as damage to roofs from solar panel installation, and ongoing concurrent roofing problems are very common.

  10. I installed a 10kW solar system in 2009, After tax credits, it has paid back 15% annual return on investment. It has paid for itself almost 2x now. I live in San Diego, CA. Don’t tell me solar power is not cost effective.

    1. Fair point, but other rate payers or tax payers are subsidizing your solar installation. Solar is not economically viable at scale and once all costs are accounted for.

  11. This post has aged like milk, hasn’t it? For those who didn’t notice: this post is almost 10 years old.

    Solar power costs dropped like crazy over the past 10 years. It costs less than 1/4th of what it did back then. I guess the liberals were right about investing-in and researching solar.

  12. > As you correctly note, that is an old post

    To be clear: not only is it an old post — BUT the chart shown is now ridiculously incorrect. At this point, it’s so absurdly wrong that it deserves to be removed. Conservatives will reference it to confirm their pre-existing beliefs about protecting every fossil fuel and panning renewables. At this point in time, it’s basically like telling people that horses and buggies are more economical than automobiles.

    Yes, there’s still work to be done on energy storage, so that power can be stored when it’s generated and consumed later. That’s just an additional hurdle, and a different issue than the one the graphic shows. But it’s being treated like an insurmountable issue.

  13. It’s been 12 years since this article was published, and it’s obviously aged like old milk. Without arguing about the various ways to define the cost of electricity (levelized cost, net cost, etc), solar cost has continued to decline, and total installed capacity per year has been skyrocketing since basically a year after this was published. Eco fads indeed.

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