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The article doesn't go into details about the causes of the drop in demand, but it does say that ... > "Thanks to a combination of greater energy efficiency, o

The article doesn't go into details about the causes of the drop in demand, but it does say that ... > "Thanks to a combination of greater energy efficiency, outsourcing of heavy industry, and customers generating their own power on site, demand for utility power has been flat for 10 years, and most forecasts expect it to stay that way." So the drop in demand may be being driven by things other than cost, meaning that a continued decrease in cost may not result in increased demand.

kragen 9y ago
The drop in demand is certainly driven by things other than the cost of energy, because energy has gotten mildly cheaper over the last ten years, during which time the demand has stayed the same. You could argue that those factors, whether they're outsourcing of heavy industry or whatever, will prove stronger than the dramatic decreases in energy prices brought by photovoltaics. But that doesn't seem very likely, because photovoltaics are dropping in price about 30% per year, while whatever forces are limiting demand for electrical energy seem to have been just sufficient to keep energy demand increase down to 1% during 2006-2016 (the last ten years on the graph), almost exactly counterbalancing a 14% increase in GDP over the same period. That is, they're pushing down electrical energy demand by about 1.3% per year. So if the long-term price elasticity of energy demand is somewhere in the neighborhood of -0.8, which seems like a reasonable guess based on a cursory glance at the econometrics research, we would expect energy demand to grow by about 25% per year once photovoltaics are the marginal source of energy — or 24% if whatever mysterious anti-growth figures this article is about continue to operate in the same way. Now, you could argue that maybe the elasticity isn't -0.8. Maybe it's -0.2 or -1.2. But to suppose that a sudden and sustained 30% yearly drop in the price of energy would be wholly counterbalanced by whatever has held energy consumption constant over the last ten years requires the wholly implausible assumption that the absolute value of the elasticity is smaller than about 0.05. You might argue that photovoltaic modules aren't really dropping in prices 30% per year. The old page at https://www.solarserver.com/service/pvx-spot-market-price-index-solar-pv-modules.html https://www.solarserver.com/service/pvx-spot-market-price-in... shows the historical price history from PVXchange from May 2009 (€2.62/Wp in Europe) to May 2017 (€0.45/Wp in Europe), and PVXchange's current prices http://www.pvxchange.com/priceindex/default.aspx?template_id=1&langTag=de-DE http://www.pvxchange.com/priceindex/default.aspx?template_id... are €0.37/Wp in Europe in the "mainstream" division. Averaged over 8 years and 7 months, that's a 1.88% price drop per month, which works out to 20% per year (not 23%, as you might think). But much of that 20% was in the 2013–2015 price plateau, during which time the prices remained almost unchanged, and which seems to be over. Now, shipping volumes are way up, and so we should move much more rapidly down the learning curve. So 30% is, if not an open-and-shut prediction, at least a plausible one. We aren't seeing these demand-stimulation effects yet because, although photovoltaics' growth and price reduction is exponential and rapid, they're still only a tiny percentage of the overall marketed energy supply, and we don't have grid-scale storage online yet. That's why it will take until the early 2020s for these effects to become dominant — maybe even later in the US.

kragen 9y ago

The drop in demand is certainly driven by things other than the cost of energy, because energy has gotten mildly cheaper over the last ten years, during which time the demand has stayed the same. You could argue that those factors, whether they're outsourcing of heavy industry or whatever, will prove stronger than the dramatic decreases in energy prices brought by photovoltaics. But that doesn't seem very likely, because photovoltaics are dropping in price about 30% per year, while whatever forces are limiting demand for electrical energy seem to have been just sufficient to keep energy demand increase down to 1% during 2006-2016 (the last ten years on the graph), almost exactly counterbalancing a 14% increase in GDP over the same period. That is, they're pushing down electrical energy demand by about 1.3% per year. So if the long-term price elasticity of energy demand is somewhere in the neighborhood of -0.8, which seems like a reasonable guess based on a cursory glance at the econometrics research, we would expect energy demand to grow by about 25% per year once photovoltaics are the marginal source of energy — or 24% if whatever mysterious anti-growth figures this article is about continue to operate in the same way. Now, you could argue that maybe the elasticity isn't -0.8. Maybe it's -0.2 or -1.2. But to suppose that a sudden and sustained 30% yearly drop in the price of energy would be wholly counterbalanced by whatever has held energy consumption constant over the last ten years requires the wholly implausible assumption that the absolute value of the elasticity is smaller than about 0.05. You might argue that photovoltaic modules aren't really dropping in prices 30% per year. The old page at https://www.solarserver.com/service/pvx-spot-market-price-index-solar-pv-modules.html https://www.solarserver.com/service/pvx-spot-market-price-in... shows the historical price history from PVXchange from May 2009 (€2.62/Wp in Europe) to May 2017 (€0.45/Wp in Europe), and PVXchange's current prices http://www.pvxchange.com/priceindex/default.aspx?template_id=1&langTag=de-DE http://www.pvxchange.com/priceindex/default.aspx?template_id... are €0.37/Wp in Europe in the "mainstream" division. Averaged over 8 years and 7 months, that's a 1.88% price drop per month, which works out to 20% per year (not 23%, as you might think). But much of that 20% was in the 2013–2015 price plateau, during which time the prices remained almost unchanged, and which seems to be over. Now, shipping volumes are way up, and so we should move much more rapidly down the learning curve. So 30% is, if not an open-and-shut prediction, at least a plausible one. We aren't seeing these demand-stimulation effects yet because, although photovoltaics' growth and price reduction is exponential and rapid, they're still only a tiny percentage of the overall marketed energy supply, and we don't have grid-scale storage online yet. That's why it will take until the early 2020s for these effects to become dominant — maybe even later in the US.