The sun finally shines on solar power (thanks mainly to China)

I've sung the praises of solar energy many times before on these pages, and I've made several mentions of how cost-effective it is becoming. But it does seem that, in 2016, solar has finally achieved "grid parity", that long-sought after status where solar electricity is cheaper to produce than coal-fired electricity, even without government subsidies. In many countries, solar (and, incidentally, also wind power) can now outbid traditional technology competitors on its own merits. A recent Deutsche Bank report says that solar electricity is now becoming price-competitive in 80% of countries.

And the future is looking even sunnier: over the next 5 years, the US Energy Information Administration is expecting solar power to become nearly 40% cheaper than a new coal plant built to modern specifications (i.e. incorporating carbon capture and storage). Recent competitive bids in South Africa and Chile have already bettered that margin. Tenders in the Middle East are even lower, with price quotes as low as 2.4c per kWh, a fifth of the cost of average American electricity prices. Many private corporations, from Ontario to India, are installing their own solar panels, in parking lots and on factory roofs, because over the long term it is cheaper than buying electricity from the grid.

So, how has this happened? In 2016 alone, the market price of solar cells dropped an astonishing 27%, thanks almost exclusively to Chinese mega-companies like Jinco Solar, the world's largest manufacturer of solar modules. Chinese producers are using smarter manufacturing techniques, more automation, faster machines, and greater output volumes to gradually reduce the price of new panels. Jinco, and other producers like it, now uses better quality silicon that is easier to handle, and has imported techniques from the semiconductor industry to improve productivity. Just three years ago, a typical Chinese cell factory churned out 1,600 units an hour; today, it is more like 4,000. It doesn't hurt that the price of polysilicon, the main ingredient in solar cells, has plummeted recently.

The burgeoning demand for solar installations, that has made substantial efficiencies of scale in solar panel production possible, is also being kick-started by China itself, and the country is expected to install fully 40% of the global total of new solar capacity this year. It is not too much of a stretch to say that China's aggressive ramping up of its solar program has single-handedly galvanized and subsidized the green energy push worldwide.

All of this is not to say that solar power has overcome all of its challenges and drawbacks. With the best will in the world, solar technology can not generate power in the dark, although it is now surprisingly efficient on a cloudy day, even in relatively high latitude countries like Canada and northern Europe. Electricity storage technology - essentially batteries - still lags behind solar generation technology, and makes base-load solar generation (such as can be provided by coal, gas, nuclear, etc) an impossibility at present. But then no-one is claiming that solar should shoulder the whole load of renewable power generation, and there are many other clean energy resources (e.g. wind, tidal, geothermal, hydro, etc) that are available to run in parallel.

Also, the cost of the solar panels themselves can be a relatively small part of the overall cost of solar electricity (estimated to be less than 25% in Canada, for example), with installation labour and land costs making up the lion's share. So, the trend in cost reductions is necessarily limited in high labour and/or land cost countries like Japan (or Canada, for that matter). And, even if solar power might now be competitive without subsidies, an estimated 98% of installations over the last year were in fact subsidized, including those in China.

But, be that as it may, let's give credit where credit is due: solar is finally having its day in the sun. Donald Trump's characterization of solar energy as "so expensive" has become just another alternative fact among many.