Explain Yourself, Solar Guy

Two top solar executives (associated with SunPower and Solaria) have a new presentation from which Stephen Lacey of Climate Progress has extracted some very interesting figures ("Solar is Ready Now"). The first shows declining costs over time.

Lacey notes that costs have fallen 18 percent for every doubling of production, almost equal to a "Moore's Law" for solar, and also produces a graph from the Rocky Mountain Institute predicting that installation costs will fall by 50% over the next five years.

This next graph (below) is less impressive. "17 nuclear power plants worth of solar peak power" needs some unpacking. As Lacey notes: "Nuclear is a baseload resource; solar PV is more of a 'peaking' resource. To compare 17 gigawatts of global solar PV development to 17 gigawatts of nuclear power plants ignores the fact that nuclear produces far more electricity than an equivalent solar PV plant." In the previous post, we just saw a nice breakout for wind power distinguishing among "energy, capacity, and ancillary services," in which it was noted that "a 100-MW wind farm is only worth as much as 15 MW of nuclear power from a capacity standpoint." Do not similar qualifications apply to solar? Mr. Solar Executive, we want to be convinced; do us the favor of addressing objections.

Perhaps that's a bit unfair, for the following chart does seek to show a high correlation between peak consumption and peak solar output. However, the chart is merely suggestive and does not really allay reasonable doubts.

There are several other charts in the solar executives' presentation (as rendered by Lacey) basically purporting to show that solar is cheaper than natural gas and nuclear power, and will become cheaper than coal (though there is nothing comparing solar with wind--an interesting omission). “We are considerably lower than natural gas peaker plants. . . . We’re also coming in lower than new nuclear and becoming lower than new coal. Gigawatts of these plants are being developed in months – not years or decades.”

If solar is looking so good, Wall Street has yet to figure it out. No great faith should be placed in the rationality of stock markets, as everyone now knows. The capital markets can badly misprice value over protracted periods. Still, one is obliged to note that solar stocks are in the pits, despite a recent bid for SunPower from the French energy giant Total.

Solar stocks have also been poor performers as against coal and natural gas stocks, and have not held up well against the nuclear sector despite the beating the latter took after Fukushima. Industry executives need to address this poor performance if they are to win over the skeptical. What is going on? Will solar be another of those industries (like 19th century railroads) that transformed the world while impoverishing a great many  investors?

The really vital question, which one almost never sees addressed in industry promotions, is the wind-solar-gas-coal-nuclear interaction, that is, how they can work together as part of an overall system.