Solar is too big to fail, said Deustche Bank. Sooner than later, it will likely take over electricity markets worldwide.
Four years ago, markets once “heavily dependent on coal for electricity generation” enjoyed a 7:1 advantage over solar, explained Deutsche Bank’s exhaustive report Crossing the Chasm: Solar Grid Parity in a Low Oil Price Era (PDF). With the concurrent cratering of oil prices and solar costs, that ratio could approach 1:1 within two years. Crossing the Chasm predicts solar costs will shave off another 40 percent by 2017, thanks to the much more sensible financing of PV deployment and pooling of assets in yieldcos — like, say, the one between First Solar and SunPower, which Deustche Bank analyst Vishal Shah called “the best strategy” for both companies.
Alternately, one of the most influential banks in the world added in Crossing the Chasm that it expects global electricity prices to double over the next two decades, “making the case for solar grid parity even stronger.” Even though natural gas prices have (predictably) cratered even faster — over 85 percent in the last decade — that’s what happens to unsustainable booms that finally go bust. Thanks to what Tesla Energy’s Elon Musk called our “handy fusion reactor in the sky” when announcing Tesla Energy’s sold-out storage battery Powerwall, solar is a boom with no bust, argued Deutsche Bank. “The solar sector has been generally under-owned by institutional investors,” Crossing the Chasm explained, “and we expect greater institutional ownership to drive positive momentum for the sector over the next 12-18 months.”
Crossing the Chasm did take pains to note that despite these cratering costs, electricity rates have nevertheless risen around 20 percent in the United States, thanks to transmission and distribution infrastructure investments, which account for half of its customers’ bills. They have only continued to accelerate — the utilities’ capital expenditures for transmission and distribution were 300 percent higher than 1981 — but it is clear that they are due for a slowdown, getting back to Tesla. Deutsche Bank is already on record as stating, as Giles Parkinson noted, that Tesla Energy’s battery pricing translates to less than half the industry costs. This is perhaps why about $625 million of the $800 million in immediate sales of Tesla Energy’s Powerwall came from businesses and utilities.
That’s what happens when a sustainable boom explodes.
“Looking back 8-10 years ago, the solar industry was in the primitive stages and mostly dependent [sic] on government subsidies,” Crossing the Chasm concluded. Today, “it is becoming increasingly clear that solar is now competitive with conventional electricity generation.”
Strip out the policy uncertainty, and solar saves the grid, strutting into the sunset.