Solar costs falling while fossil costs rise

In not-so-sunny southern Victoria, how does solar power stack up for producing cheap power? Peter Reefman of the Portland Sustainability Group offers the following comparative calculations. As he points out, solar panel cost “is falling by approximately 7% per year, while fossil fuel costs continue to rise”.

I was asked what the raw cost (without rebates) of solar per MWh are compared to coal, gas, nuclear, etc.

Here is what solar actually costs per MWh in 2012 on the coast of Victoria.

Each 1kW of solar without any rebates whatsoever costs approximately $2,500 fully installed.

Each 1kW of solar on the coast of Victoria will average 3.75kWh per day, or 1.35MWh per year.

The typical life of a solar system is 25 years, or 33.75MWh for each 1kW in its lifetime.

So the cost per MWh for solar is $74 on the coast of Victoria. (By the way, with the current subsidies this cost is $51 per MWh.)

In higher solar regions the cost is significantly lower than this. For example Alice Springs has almost twice the solar power as coastal Victoria, so Alice Springs has a solar cost per MWh of less than $40 without rebates, and $15 per MWh with subsidies (they get more subsidies in Alice because there is more sun).

This cost is falling by approximately 7% per year, while fossil fuel costs continue to rise.

In comparison, the Switkowski report put
* Gas at about $45 per MWh
* Coal at about $35 per MWh
* Nuclear (if it was allowed) at about $55 per MWh