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Solar is already dirt cheap, and there is not much more juice left to squeeze. We might get a little bit more cost reduction over the next decade, maybe somewhe

Solar is already dirt cheap, and there is not much more juice left to squeeze. We might get a little bit more cost reduction over the next decade, maybe somewhere in the 10-50% range, but this isn't much compared the multiple hundreds of % that we saw over the last two decades. Also, at least in the short term, we are seeing some increases in cost due to supply chain and inflation issues.

pfdietz 5y ago
You're just repeating the assertion there. What fundamentally prevents the cost of solar from falling even more? This cost has to come from some irreducible input. Materials? Energy? Labor? Which is it? As for cost of delivered energy from solar, there is a final reduction that can still be obtained even if the cost/watt were to plateau immediately: extension of the lifespan of the system. This could be obtained by, over time, identifying and addressing all the degradation modes of the components of the system.
- qqqwerty 5y ago
  Predicting the future is hard. You are asking a question that pretty much no one has a good answer to (at least no one who is being honest). Are permitting fees an irreducible input? Probably not. Are lawyers fees an irreducible input? Maybe but unlikely. Are project developer salaries an irreducible input? I have no idea. But I also think you are mis-applying a mental model about the cost of manufactured goods to the cost of solar plant development. In a competitive free market, the cost of manufactured goods should eventually be reduced to a sum of their inputs plus any profit. But solar development is inherently an exercise in value capture. The project developers are trying to capture as much value as possible for their investors. The only thing that matters is that solar stays competitive in the energy market. As long as that happens, someone somewhere in the value chain can try and capture more value as other costs decrease. For example, what is stopping land owners from raising rents for solar projects? Right now, land is relatively cheap because there is not a lot of competition for it. But there are only so many parcels that are near transmission lines with good geographical features, and I fully expect land prices to increase as solar penetration increases. But this is really just a guess. If you are interested in current project cost breakdowns, figure 30 in this report does a pretty good job[1]. Module costs were the primary driver of cost reductions in the last 20 years. But they now account for only 40% of total project costs. So even if module prices fell by 50%, that would only result in a 20% decline in total project cost. While a 20% drop in prices would be nice, I don't think it really changes the math much with respect to nuclear (the math is already overwhelmingly in favor of solar). Also, I do agree that the average lifespan of these systems are going to be much longer than 20 years and that has not been priced in. But I don't think that is going to really change things anytime soon. Financial models and risk models are incredibly crude instruments. Using them to model even 5 to 10 years in the future is already extending them well beyond what they were designed for. But we have to put an end date on these models because at some point every project is going to cease to exist. And 20 years is what the banks like, so that is what we use. [1] https://www.nrel.gov/docs/fy21osti/77324.pdf https://www.nrel.gov/docs/fy21osti/77324.pdf
  - pfdietz 5y ago
    I was asking you to justify your statement. You don't get to make such an assertion then hide behind "prediction is hard" when asked to justify it. I will note that there have been past attempts to call a floor in the cost of PV, for example the period from 2002-2007. That was not the floor. Current cost breakdowns are nice, but don't show that costs can't be further reduced. > For example, what is stopping land owners from raising rents for solar projects? What stops them is the enormous quantity of land that's available. In the US, for example, land can be < 1% of the cost of a utility-scale PV installation.
    - qqqwerty 5y ago
      I did justify my statement, but I will say it again. Solar project development is an exercise in value capture. As long as solar is cheap enough to compete in energy markets (which is currently the case), when some development costs go down, someone else in the value chain will try and find a way to increase their slice of the pie to try and compensate. A good analogy is landlords. Why do they raise rents instead of decrease rents? Because they want to profit, and because their costs increase over time due to inflation, and because the market will let them. Here is another fun one. What happens if/when interests rates go up? We are at record low rates, and most solar projects are debt financed? How will higher rates impact project costs? The obvious answer there is that costs will go up. > In the US, for example, land can be < 1% of the cost of a utility-scale PV installation. As I mentioned, that is the case now, but it will likely not be in the future. The number of sites close to existing transmission lines, with good geographical features requiring minimal grading, low flood risk, low wildfire risk, low hurricane risk, etc... are going to diminish quickly as saturation increases. And when it comes to land, costs can go from reasonable to painful real quickly. I am certainly rooting for costs to go down, as I think that is better for humanity. But I am not betting on it. Why do you think they are going to go down? I don't think you have made a good case for lower costs other than that is what has happened in the past.

pfdietz 5y ago

You're just repeating the assertion there. What fundamentally prevents the cost of solar from falling even more? This cost has to come from some irreducible input. Materials? Energy? Labor? Which is it? As for cost of delivered energy from solar, there is a final reduction that can still be obtained even if the cost/watt were to plateau immediately: extension of the lifespan of the system. This could be obtained by, over time, identifying and addressing all the degradation modes of the components of the system.

qqqwerty 5y ago
Predicting the future is hard. You are asking a question that pretty much no one has a good answer to (at least no one who is being honest). Are permitting fees an irreducible input? Probably not. Are lawyers fees an irreducible input? Maybe but unlikely. Are project developer salaries an irreducible input? I have no idea. But I also think you are mis-applying a mental model about the cost of manufactured goods to the cost of solar plant development. In a competitive free market, the cost of manufactured goods should eventually be reduced to a sum of their inputs plus any profit. But solar development is inherently an exercise in value capture. The project developers are trying to capture as much value as possible for their investors. The only thing that matters is that solar stays competitive in the energy market. As long as that happens, someone somewhere in the value chain can try and capture more value as other costs decrease. For example, what is stopping land owners from raising rents for solar projects? Right now, land is relatively cheap because there is not a lot of competition for it. But there are only so many parcels that are near transmission lines with good geographical features, and I fully expect land prices to increase as solar penetration increases. But this is really just a guess. If you are interested in current project cost breakdowns, figure 30 in this report does a pretty good job[1]. Module costs were the primary driver of cost reductions in the last 20 years. But they now account for only 40% of total project costs. So even if module prices fell by 50%, that would only result in a 20% decline in total project cost. While a 20% drop in prices would be nice, I don't think it really changes the math much with respect to nuclear (the math is already overwhelmingly in favor of solar). Also, I do agree that the average lifespan of these systems are going to be much longer than 20 years and that has not been priced in. But I don't think that is going to really change things anytime soon. Financial models and risk models are incredibly crude instruments. Using them to model even 5 to 10 years in the future is already extending them well beyond what they were designed for. But we have to put an end date on these models because at some point every project is going to cease to exist. And 20 years is what the banks like, so that is what we use. [1] https://www.nrel.gov/docs/fy21osti/77324.pdf https://www.nrel.gov/docs/fy21osti/77324.pdf
- pfdietz 5y ago
  I was asking you to justify your statement. You don't get to make such an assertion then hide behind "prediction is hard" when asked to justify it. I will note that there have been past attempts to call a floor in the cost of PV, for example the period from 2002-2007. That was not the floor. Current cost breakdowns are nice, but don't show that costs can't be further reduced. > For example, what is stopping land owners from raising rents for solar projects? What stops them is the enormous quantity of land that's available. In the US, for example, land can be < 1% of the cost of a utility-scale PV installation.
  - qqqwerty 5y ago
    I did justify my statement, but I will say it again. Solar project development is an exercise in value capture. As long as solar is cheap enough to compete in energy markets (which is currently the case), when some development costs go down, someone else in the value chain will try and find a way to increase their slice of the pie to try and compensate. A good analogy is landlords. Why do they raise rents instead of decrease rents? Because they want to profit, and because their costs increase over time due to inflation, and because the market will let them. Here is another fun one. What happens if/when interests rates go up? We are at record low rates, and most solar projects are debt financed? How will higher rates impact project costs? The obvious answer there is that costs will go up. > In the US, for example, land can be < 1% of the cost of a utility-scale PV installation. As I mentioned, that is the case now, but it will likely not be in the future. The number of sites close to existing transmission lines, with good geographical features requiring minimal grading, low flood risk, low wildfire risk, low hurricane risk, etc... are going to diminish quickly as saturation increases. And when it comes to land, costs can go from reasonable to painful real quickly. I am certainly rooting for costs to go down, as I think that is better for humanity. But I am not betting on it. Why do you think they are going to go down? I don't think you have made a good case for lower costs other than that is what has happened in the past.