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The very genuine promise of cheap electricity – solar power

Nuclear power never delivered on its promise, but will solar?  John Quiggin, Canberra Times, 19 Oct 20, 

The International Energy Agency attracted attention recently when executive director Fatih Birol declared that solar would be “the new king of electricity markets.” Long known for its conservative view of renewables, the IEA’s latest Global Energy Review marked a radical change. Instead of growing slowly over time, solar (along with wind and other renewables) is now seen as meeting all new electricity demand, with coal set for a sharp decline. …….

Solar modules cost virtually nothing to operate, and last a long time. Manufacturers’ warranties typically run for 25 years, guaranteeing at least 80 per cent performance. Experience and experimental evidence suggest this is conservative: even after thirty years, modules installed today should still be working at around 85 per cent of their initial capacity. A working lifetime of twenty-five years is therefore conservative…………
Once a solar module has been installed, a zero rate of interest means that the electricity it generates is virtually free. Spread over the lifetime of the module, the cost is around 2c/kwh (assuming $1/watt cost, 2000 operating hours per year and a 25-year lifetime). That cost would be indexed to the rate of inflation, but would probably never exceed 3c/kwh. There is, then, a real possibility that solar PV and other renewable technologies could fulfil the promise made decades ago by the promoters of nuclear power: that it will deliver electricity “too cheap to meter”. (Even with access to cheap capital, nuclear power never delivered on that promise.)

The prospect of electricity this cheap might seem counter-intuitive to anyone whose model of investment analysis is based on concepts like “present value” and payback periods. But in the world of zero real interest rates that now appears to be upon us, such concepts are no longer relevant. Governments can, and should, invest in projects whenever the total benefits exceed the costs, regardless of how those benefits are spread over time.

October 20, 2020 - Posted by | 2 WORLD, renewable

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