Nuclear and solar costs are equal – or are they?

July 28, 2010 -

On Monday, The New York Times ran a piece suggesting that solar costs are now equal to nuclear.

“Solar photovoltaics have joined the ranks of lower-cost alternatives to new nuclear plants,” John O. Blackburn, a professor of economics at Duke University, and Sam Cunningham, a graduate student, wrote in the paper, “Solar and Nuclear Costs — The Historic Crossover,” according to the piece.

It’s true: solar PV costs are rapidly declining, for a number of reasons.

Here are a few of them:

1. China has entered the U.S. market by storm, and PV manufacturing costs are cheaper than they were during the recession.

I had an interesting interview today with Ron Kenedi, VP, Sharp Solar Energy Solutions Group. He said China is in high demand of U.S. and European solar developments in order to build their solar program. Right now, the Chinese government is backing solar with low interest loans and other incentives. While Sharp does not sell solar models in China, Kenedi said this influx of Chinese interest is affecting the U.S. solar market.

“We want to make solar more affordable to the average person, and the drops came very quickly,” Kenedi said.

Because PV manufacturing costs are dropping, business is good for the U.S. solar market sending products to China.

2. Falling silicon prices.

Silicon, the semiconducting material of choice used in solar panels, is not as high in demand as it was when solar first started heating up. In 2005-2007, the solar market grew faster than was expected, especially in Germany, resulting in a silicon shortage.

“Now silicon is coming down and due to come down more in the next year,” Kenedi said.

3. Productivity increases.

While solar power was first commercialized in the U.S. by Bell Labs in the 1950s, it’s still a relatively newly developed industry. Therefore, solar companies are still discovering a sense of balance in system operations. In an interview I had last week with Tom Fair, VP of Renewables for NV Energy, he described this sense of balance to be an important part of the economic equation for PV.

“People are getting smarter about how to do projects. Every hole you drill, every bolt you fasten, everything becomes a balance down to the knit. That progress will continue as people become smarter.”

So PV prices are coming down. And according to The New York Times report, the costs of nuclear power have been rising over the past eight years, so that nuclear and solar’s crossover occurred at 16 cents per kilowatt hour.

But here’s the rub: Comparing the costs of various renewable resources is like comparing apples to oranges.

In his article, “How to Compare Power Generation Choices,” in Renewable Energy World, John Hynes, partner at Excidian, explains how base load determines true cost.

“It makes no sense to compare the cost per kWh to generate electricity from wind on land with the costs per kWh to generate electricity from coal because these two technologies satisfy two different customer needs,” Hynes writes.

While solar plants may be far cheaper to build than nuclear or power plants and not be restricted by EPA regulations and such, solar is not capable of operating 24/7 like nuclear or coal. Solar is what’s called “peak load generation,” meaning these plants operate at their maximum capacity for about 5 to 15 percent of the hours in a year. Why? Because the sun goes down at night. And while solar storage and molten salt reserves may turn that tide over time (more on that to be blogged latter), nuclear’s load factors exceed 75 percent and are usually more like 90 to 98 percent.

So is it even possible to compare solar and nuclear costs?

Yes, but you’d have to change one technology so that both technologies are in the same load factor category, Hynes suggests. Essentially, a nuclear power plant would have to be reduced to operate at its maximum capacity for only 5 to 15 percent of the hours in a year.

Only then could solar and nuclear start talking apples to apples.