Photovoltaics vs the Grid

This sounds like good news to me.

A few weeks ago, Barclay’s downgraded their position on U.S. electric utilities, citing the potential of photovoltaics and local storage to compete with the cost of grid electricity and the possibility that slow-moving electric utilities won’t adjust in time.

If so, it seems like another stealth disruption of an existing industry, just as smartphone cameras are all of a sudden taking a bite out of traditional camera manufacturers’ sales.

To my mind, there are some fundamentals that support Barclay’s view. To the extent that electric utilities depend on fossil fuels, they have a cost disadvantage. We mine the least expensive coal, oil, and gas first, and, as they are exhausted, move to more expensive sources. As an oil executive once said to me, “We aren’t going to run out of oil; we’re just going to run out of $50-a-barrel oil.” And then $75-a-barrel oil, and then $100-a-barrel oil, and then…

At the same time, the cost of manufacturing and installing a watt of photovoltaic capacity is going down as our manufacturing skill, cell efficiency, and production output increase. While there will no doubt be ups and downs in the costs of both, there seem be underlying, inexorable trends at work.

PV-FF Cost Trends
PV-FF Cost Trends

Come to think of it, I sure see a lot of PV panels on rooftops these days…