Prices of solar panels are in a steep dive thanks to massive production rates in Asia. In the US, local installers of arrays that used to take 3 days to install can now complete the task in 4 hours. Tesla just announced its new home battery pack starting at $3500.
And sunshine is still free. Where does all this lead?
Inevitably it will lead to a massive supply of electrons created from sunlight that can be stored for later use. For all intents and purposes there will be an infinite supply of electrical power at costs that will continue to decline. Simple supply and demand curves will tell you that given a huge supply of virtually free electricity will cause the price of each kWh to approach zero, even as demand increases.
Today’s cost of sunshine power.
Consider today’s 5kW array with a battery big enough to store a few days power for a typical home. Currently that is about US$40k. Given a 20 year life span and a 5% interest rate the system cost is about $5000 per year ($2000 in depreciation and $3000 in debt service). That is $400 per month.
In my home, I average 3kW/hour and this system would be fine for me. So I would be paying the equivalent about US$.19/kWh (in fact I could probably use a smaller system, but let’s go with this!). This is not too much higher than the US$.12/kWh I currently pay my local utility.
What about in a few years?
Expect the installed cost on that same system to drop to $15,000 (think big screen TVs that used to cost $4000 that now cost $400) then the monthly cost of depreciation and debt service drops to $162.50/month (.07/kWh). When the cost drops to $10,000 its just $110/month (.05/kWh)
This in itself will put a downward pressure on the market price of power (not just electricity, either, liquid fuels, NG, etc will all decline in value as electricity becomes a more viable substitute). Can you say “Paradigm Shift?”
Predictable changes in marketing strategy … just compare it to the information industry.
Let’s take it a step further and compare the energy market to the information market. Google has made a global fortune giving away information for free and monetizing the mechanism by which it is done. Imagine the same for energy. Companies will be happy to install a whole system on your home in return for learning more about your spending habits and daily routines. Smart appliances and other household equipment that relay information to your energy provider, which in turn will parlay that into a revenue stream by selling your information to all the other companies that want to sell you everything from food, to entertainment…. Because now you will have that $400 per month you used to spend on energy back in your pocket to spend elsewhere. Basically, energy will be Open Source
The part that makes this REALLY big and completely unavoidable? Not everyone in the world needs Google … but every single person needs energy! It is just a matter of time before all 6 billion of us will have more reliable power, supplied essentially for free, in return for spending those dollars on goods and services, other than fossil fuels.
100 years from now people will look back on the fossil fuel industry the same way we look at fossils today; An industry dinosaur.