Breakthrough: Making Solar as Cheap as Coal in China

Cap and trade and carbon taxes are both incremental, based on gradual emissions reductions and gradual increases in the price of carbon.

But technology innovation is not gradual. It is nonlinear and disruptive. It is nonlinear in the sense that classic technology adoption follows an "S-curve".

For a long time, only a small percentage of consumers -- say 5 percent -- use a new technology (e.g., car/cell phone use between 1980 - 1995). Then, suddenly, within just a few years, say between 1995 to 2000, a huge number (~ 50 percent) of consumers get cell phones.

The same will be the case with clean energy technologies like solar. In the case of solar, the S-curve will be even more dramatic. A small number of consumers, ~.001 percent of electricity users -- use solar (the 55 years between ~1975 and 2030), and then suddenly -- if we buy down the price -- solar will become cheap enough to get picked up in exponential quantities. The Moore's law of energy over the last 30 years is that solar price falls 20 percent for every doubling of capacity. It is an amazingly predictive algorithm.

When is that moment? According to one study (Van der Zwaan and Rabl, 2004: 1551), solar becomes as cheap as dirty energy after investments in solar production $50 and $212 billion of investment.

The high number is $200 billion, so let's base our assumptions on that. One private investment (Perryman 2003) estimates that $1 dollar of taxpayer money invested in various sectors of the economy to generate clean energy will generate $.66 in private capital. So if $100 of private capital follows $200 billion of public investment into solar, how long would it take to spend the $300 billion and buy down the price of solar?

Why does the answer matter? Because global warming doesn't get solved until clean energy is within striking distance of the price of coal in China.

Post a comment