Goldman Sachs Declares Solar Energy Will Soon Be Cheaper Than Fossil Fuels, and Elon Musk is a Genius

by , 03/18/14

Goldman Sachs, Solar Energy, solar parity, price of solar panels, price of solar energy, Elon Musk, Tesla, Tesla Gigafactory, renewable energy, cost of fossil fuels

They may be one of the greediest, most exploitative firms on Wall Street, but Goldman Sachs knows a profitable investment when they see one. The company recently released a report that states solar energy is fast approaching grid parity – the moment when electricity from solar power becomes the same price or cheaper than electricity produced by fossil fuels. The report also cites the vision of Tesla CEO Elon Musk as a major factor in the growth of renewable energy – as Inhabitat reported, Tesla’s recently announced lithium-ion “Gigafactory” is expected to reduce EV battery costs by more than 30 percent. That, coupled with the fact that solar panel prices continue to plummet, is a big reason why Goldman Sachs sees renewable energy as the path to the future.

Goldman Sachs, Solar Energy, solar parity, price of solar panels, price of solar energy, Elon Musk, Tesla, Tesla Gigafactory, renewable energy, cost of fossil fuels

We often assume that Wall Street investment bankers represent everything that is anti-environment. The truth is, all investment bankers care about is money. In many cases, this drives them to support corporate loopholes and industry practices that put the environment at risk, but not always. In 2012, Goldman Sachs surprised the world by announcing $40 billion in clean energy investments. And just a few months ago, Goldman Sachs said that the renewable energy sector is one of the most compelling and attractive markets. Now they’ve gone a step further. According to the firm’s recent report, not only is solar power a good investment, it’s also poised to make fossil fuels obsolete:

…our Clean Energy team believes the number of households hitting grid parity will continue to grow as the cost of the systems comes down…SolarCity has seen a 40% decline in the per watt cost of PV panels since the second quarter of 2013 driven by improved scale which is expected to continue,” state clean tech analysts Brian Lee and Thomas Daniels. “This has been true for Tesla’s battery costs as well, which have declined from of $500/KWh in 2008 to $250/KWh for the Model S to potentially $125/KWh at the gigafactory. As a result we should note that the quantitative grid parity and return calculations we show above are arrived at without any Federal or state credits.

Related: The World’s Six Coolest Solar Powered Projects

The pair go on to predict that we could have solar grid parity as soon as 2033 (even sooner in places like New York, California, and Hawaii, where electricity is already more expensive), especially if prices for existing forms of electricity increase 3% annually (which is expected. So much for “cheap coal”).

But advocates of solar power have been predicting grid parity for years. Perhaps even more surprising is that Lee and Thomas acknowledge that thanks to solar, more and more people will be able to leave the grid altogether.

This may be far off, aside from entailing a much more expensive solar/battery system, this is also potentially out of people’s comfort zone entailing a 100% reliance on a new system for their electricity needs. That said, decreased reliability from an aging distribution infrastructure, a broadening desire to reduce the carbon footprint, and perhaps most importantly, the reduction of solar panel and battery costs could also work together to make grid independence a reality for many customers one day.

A future in which every home is its own solar energy plant, creating enough juice to power the sweet Tesla parked in the garage? Sign me up.

Via Business Insider

Images via Arlingtonva and Heisenberg Media

Related: Solar Energy Reaches Grid Parity In India and Italy

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  1. CR January 12, 2015 at 1:06 pm

    If I read this correctly it sounds like most people on Solar are or will be off grid yet from what I’ve gathered it seems like most are tied to the grid, without battery back up storage, unless you are out in the sticks, without access to electricity. Currently back up storage seems to have some issues. Seem that even the Utilities running the grids are trying to figure out how to get better storage. If so, how does that figure into this forecast? Also, can you shed any light on the state of the art in battery back up and where it’s going, particularly in regards to efficiency, cost, safety and maintenance?

  2. Daniel Scherer January 11, 2015 at 12:35 pm

    I’ve had the solar since June, 2010 and the Tesla since Jan, 2013. 56,000 miles now gas free.

  3. Carl Borrowman December 24, 2014 at 9:47 am

    John, I think they are talking residential, not utility scale.
    2033 is a reasonable estimate. I live here in the Mojave in California, my bill is only $25-$50/mo. The last quote I got from Solar Now was $12,000 after incentives. At that rate, it would take 20 years before the system paid for itself, if there was zero maintenance required. Of course, by that time, there is a good chance some of the panels would need replacing. That quote also didn’t account for a battery system to store energy for nighttime use, which would likely add another $5,000 to $10,000 to the total cost, and yet more components that would need to be replaced within the 20 year period before pay off.

  4. John Gebhardt March 24, 2014 at 6:57 pm

    Why do they say grid parity arrives in 2033? It is already here if you operate with very thin profit margins. DIY and a wholesale purchase price for solar all parts puts you at $1.20 per watt.

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