Is Solar Power Cheaper Than Wind? (FSLR, STP, JASO)

As the cost for crystalline solar PV panels falls toward the magic number of $1/watt, the cost of building a utility scale solar plant approaches the cost of building an equally sized wind farm. Add in the effects of subsidized renewable energy credits, and the wind turbine business could be in serious trouble.

The situation doesn’t offer a lot of consolation for struggling solar PV makers like First Solar Inc. (NASDAQ: FSLR), Suntech Power Holdings Co. Ltd. (NYSE: STP), JA Solar Holdings Co. Ltd. (NASDAQ: JASO), and many others, but it does offer an alternative to wind turbine installations that have gotten serious pushback from local residents.

The town of Brewster, Massachusetts, on Cape Cod, has now put a planned wind farm on hold as it considers installing a solar farm instead. Two planned 410-foot-tall towers were planned for the wind farm, but the builder was denied a permit from the local planning board.

According to a less recent study at the International Energy Agency, the levelized cost of building a wind farm ran in a range of $35-$95/megawatt-hour and solar generation cost about $150/megawatt-hour.  Both have certainly dropped since then, but solar costs have fallen by more than half, making solar installation quite competitive with wind.

The big difference maker, in Brewster’s case, is the price paid for renewable energy credits. The state-mandated range for solar generation is $0.205-$0.58 per kilowatt-hour, while the wind power price is set at $0.025. Solar just got a lot more attractive.

Wind turbine prices are falling, too, just not as fast as solar PV prices. And solar installations don’t typically generate the same amount of local opposition as do the tall wind towers which are deemed unsightly, noisy, and damaging to nearby residents’ health. That could change if someone proposes a large enough solar farm.

While it is possible to argue that one of government’s roles is to set and implement public policy, it is more difficult to argue that a government agency should have the power to play favorites. There’s no good reason for renewable energy credits from a solar plant to be worth 10 times or more the same credit for a wind power plant.

Another consideration is that one instance will not make a trend.  Still, spot pricing and market economics should be somewhat universal.  This needs to be watched elsewhere as communities consider alternative energy planning.

Paul Ausick