Monday, October 31, 2011

The Power of Free Electricity

A recent post on states that "Solar Photovoltaic (PV) rapidly becoming the cheapest option to generate electricity".

Kees van der Leun says that the cost of producing electricity in Arizona using PV is now $.12 per kilowatt hour. The cost of producing electricity by traditional methods is currently around $.06 per kilowatt hour. Van der Leun calculates that the price will continue to drop at the rate of about 25% per year.

I find this prediction very exciting. And like any predictions - always difficult to confirm. says that an installed industrial system in a sunny climate currently costs $.15 per kilowatt hour and the price continues to fall. Not far off from van der Luen. also says the prices are dropping significantly and also points out that savings increase with the increasing size of the installation.

At some point in time the cost of producing electricity using PV cells will drop below the cost of generating electricity using coal- and gas-fueled power stations.

When will this happen? Kees van der Leun predicts the crossover will happen in 2018 – just seven years from now

The real point is not really when will it happen, but just noting the high likelihood that it will happen.

There will be a number of benefits.When the crossover begins to take effect the world will reduce its need for fossil fuels to generate electricity. Dependencies on transporting fossil fuels all over the world will start to diminish and eventually may almost disappear. Also the carbon foot print of generating electricity via PVcells is much lower than the carbon footprint required to generate electricity via fossil fuels. Thus human-caused climate change issues are alleviated.

As if those two benefits were not enough, there is yet another outcome that is interesting and will be the topic of future posts.

As the industry moves over to PV cells the generation of electricity becomes a capital cost rather than a running cost. The operating cost of using electricity, once the cost of the installation is amortized, becomes negligible.

Even after the cost of electricity becomes cheaper than traditional fuel power stations, it is most likely that the cost of producing PV cells will continue to drop. Eventually PV cells will be built into roof shingles and external cladding for skyscrapers. After all the silicon of the cell is is impervious to rain and frost damage as any building material currently available.

At some point, most likely in the not too distant future, electricity becomes virtually free.

What does unlimited electricity mean?

How will ubiquitous, no-cost electricity affect manufacturing? Farming? Mining? Construction?

Future posts, will examine each one of these sectors in detail. I believe that some fascinating outcomes are quite possible.