by Alph » Sun Jan 23, 2011 11:33 pm
Actual, literal, consumer prices for solar panels have been falling by 1-2% per month for years. (Measured by watt of production, which is the best measure of their actual hourly energy output.) This has caused a ~15% annual decrease in price for the last few years, but solar industry companies report production costs falling at twice that rate for 2009 and 2010. Profit margins are now running as high as 60%.
Despite the current inflationary commodities climate, in the month of December they fell by 3%.
Any conversation about new energy sources besides solar is irrelevant. In the next few years, solar energy will begin permanently lowering the cost of energy worldwide, in real terms. By the end of this decade, it will be the source of essentially all new energy production. This seems pointless in the face of the massive size of the industry until you recall that prices are set by marginal consumption, and the marginal consumption in the energy industry is an extremely small sliver of high cost on and off power sources. Marginal energy consumption growth (which will be low and even negative in some places already due to the trends of lower population and greater efficiency in the developed world) will be entirely satiated by solar by the end of this decade, freezing prices (which will cause them to shrink to insignificance in the face of economic growth, energy productivity and inflation) or even causing them to fall as expensive marginal on and off sources are replaced by solar power.
By 2020, at 15% per year reduction in cost, it will cost less to install a watt of solar electricity production (which produces a kilowatt of power every month or so) than to buy a kilowatt of power at current prices. And because, at the current rate of production cost decrease, profit margins will be 99%+ by 2020 at that price, I believe that this estimate is conservative. This will make energy production trivial, and produce vast benefits to the economy when combined with the information revolution now in full swing, the likes of which we have never seen before. With incredibly cheap energy and the use of industrial machines the cost of mining, agriculture, manufacturing, transportation, construction, and any number of other economically useful endeavors will plunge. This will be a revolution as pervasive and significant as the information revolution were now in the first stages of and the industrial revolution of the last century, and our standard of living will likely rise by another order of magnitude from it, as it did in the industrial revolution and certainly will in terms of absolute economic utility and value available to the average person from the information revolution by itself.
If that seems abstract, think about it like this: What is the cost of entertainment, education, information and communication in the digital age? None. It has no cost. Whatever expense there is to it is just profit to someone who sat around and made something. This is a very peculiar thing, as entertainment, education, information and communication have historically been incredibly expensive and are all highly economically valuable. The solar revolution will do that for furniture, cars, clothing, travel, raw materials, agriculture, and construction. Think about it.
Trends that can't continue, won't. But until then, they will.