Solar cheaper than fossil fuels?

It’s not an altogether uncommon prediction these days. Just last week we heard from market intelligence company Global Data, whose latest report has found that the cost of generating clean energy like solar power is coming increasingly closer to the cost of generating energy from traditional, non-renewable sources. The report says that some US projects could reach grid parity as early as 2014. China is also due to witness similar developments, says the report, with grid parity for solar expected to reach in most regions by 2015-2016.

And while the alignment of generation costs in these countries is largely credited to increasing cumulative installed capacity, constant developments in solar PV technology are also working to drive down costs; developments by companies like Semprius – a US developer of high-concentration photovoltaic (HCPV) solar modules. In January, the North Carolina-based company set an important solar record, showing that its PV panels can convert nearly 33.9 per cent of the sunlight that hits them into electricity. Semprius says its technology is so efficient that it could soon make electricity cheaply enough to compete with power plants fueled by coal and natural gas.

As Technology Review‘s Ucilia Wang MIT’s Technology Review explains, the various fixed costs attached to solar installations make it important to maximise the efficiency of each solar panel to help bring down the price of solar energy. Semprius, like a good many other companies in this space, is doing this by using an gallium arsenide as alternative photovoltaic material to the most commonly-used silicon.

Gallium arsenide is better at converting light into electricity than silicon, but far more expensive, so Semprius is trying to cut costs in other ways. One is by shrinking its solar cells to just 600 micrometers wide, 600 micrometers long, and 10 micrometers thick, says Wang – a manufacturing process built on research by Semprius cofounder and University of Illinois chemistry professor John Rogers. It begins with Semprius’ proprietary micro-transfer printing process, which enables the company to use a very small solar cell – about the size of a pencil point. Once the cells are laid down, Semprius maximises their power production by putting them under glass lenses that concentrate sunlight about 1,100 times.

This is where Semprius’ technology introduces an important point of difference: the company’s small cells produce so little heat that they don’t require cooling, which further brings down the cost. Semprius vice president of technology, Scott Burroughs, says he expects utilities that use this PV technology to be able to produce electricity at around 8c/kWh, within in a few years. As TR points out, that’s less than the US average retail price for electricity (about 10c/kWh in 2011).

Of course, there are a couple of caveats. For one, using lenses to concentrate light has its limitations; like most PV technology, it works best under direct sunlight and a cloudless sky – energy production drops significantly under any other conditions. But as Wang points out, this could make the technology best-suited to utility-scale projects in sun-rich locations like the American Southwest. Another point is that Semprius has to begin mass-producing its panels for its parity predictions to be realised.

The company, which has raised about $US44 million from VC firms and Siemens plans to open a small factory in North Carolina this year, with capacity to make enough panels to deliver six megawatts of electricity annually, with plans to expand that to 30MW by end 2013. But it will need more money. The company will also have to reduce its manufacturing costs fast enough to compete with conventional silicon panels, whose prices fell by more than half in 2011 alone (refer Solyndra for what happens when this can’t be done in time).