1. Given that the original article was written in 2007, it makes sense that costs would have changed.

2. While I think that you can debate the calculation based on differences in technology, this article fundamentally isn’t making an apples-to-apples comparison. For fossil fuel generation, the article looks at fuel costs. Evaluating solar on that basis would lead to a $0.00/kWh, as there is no cost to sunlight. That illustrates why fuel cost is not a great metric.

Instead, I agree that levalized cost of energy (total cost of equipment, maintenance, fuel and disposal over the lifetime of the generation asset) is a more accurate comparison. To do that, we’d need to include the cost to mine and transport coal, the cost to build the coal plant, the cost of environmental remediation, the cost of transmission lines etc. You’d also have to add the cost of transportation to solar, as well as any end of life recycling/clean up. At that point you have a more accurate comparison of the costs of electricity generation, and my gut is that solar would be pretty close to fossil.

Try again:

The actual solar panels themselves are $80 though it is volatile and has swung north of $100 over the past 4 years for long periods of time. Right now it’s a 15% increase over Aug 2007 although these dates are a bit arbitrary.

“At the time of this comment (August 2011) Installed solar prices are ~$5/w for residential and <$3/w for large scale solar farms. The actual solar panels themselves are $80 though it is volatile and has swung north of $100 over the past 4 years for long periods of time. Right now it’s a 15% increase over Aug 2007 although these dates are a bit arbitrary.”

As has been said this article is old and prices have changed considerably in that time. Anyone using this article for current analyses should use more up-to-date numbers.

At the time of this comment (August 2011) Installed solar prices are ~$5/w for residential and <$3/w for large scale solar farms. The actual solar panels themselves are $80 though it is volatile and has swung north of $100 over the past 4 years for long periods of time. Right now it’s a 15% increase over Aug 2007 although these dates are a bit arbitrary.

Coal is now $76/ton; 100% increase from the article.

Natural gas prices have cratered due to new fracking techniques and are now roughly $0.004/cf; a 50% decrease from 4 years ago.

Also as Alan Dominique pointed out the whole fuels comparison is invalid. It may cost an electric utility $76 to purchase a ton of coal, but that doesn’t directly yield a $/kwh price of electricity!

You can’t just assume that the entire heat content of a ton of coal is going to be converted at 100% efficiency to electricity and delivered to your house without any losses or costs in actually transforming heat to electricity or transmission.

Fact is that coal power plants are about 33% efficient at transforming heat content into electricity, while modern natural gas cogen plants are roughly 50%.

Average transmission losses in the USA are >6%.

You stepped through all the conversion steps and losses in solar, but omitted all of these from traditional thermal generation.

The solar price was amortized over 20 years while there was not amortization done for the fossil fuels. Thermal plants don’t last forever, they also have an expected lifetime and O&M costs.

20 years for solar is reasonable, though a bit arbitrary. Panels are warranteed for 25 years and there’s no reason they wouldn’t keep on chugging for decades after that. Adding another 5 years of operation time for the solar in this analysis increases the lifetime production by another 25%. Reroofing and inverter replacements will add to O&M costs eventually, but the panels themselves are extremely durable. Most financial models have a -0.5% degradation factor on power output and then routinely over produce in real life.

The 50% price reductions in installed solar power and natural gas prices and 100% increase in coal prices over the past 4 years are each big stories.

The process of breaking down the costs of solar were very interesting to see in this article and we can see the effects on pricing that a few years have made as well as how simple definitions on operating life can affect the final numbers. Unfortunately the comparison with fossil fuels was not handled as rigorously as the solar side.