How to Make Solar Power Cost Competitive in 5 Years or Less

Last month, after a state senate bill increasing California's renewable energy standard failed to pass, the state's Air Resources Board (CARB) increased the goal on their own, establishing the 33 percent by 2012 renewable electricity standard.

California now claims the country's highest renewable energy standard, with Colorado close behind -- 30 percent renewable by 2020.

The power of the sun could serve as a strong ally to help these states reach their renewable targets and fulfill their efforts to transition off fossil fuels.

"The amount of solar energy that strikes the earth every hour is roughly equivalent to the total amount of energy that humans use in an entire year," said Sam Newman, a consultant with Rocky Mountain Institute's electricity practice. "So when you look at ways to transition off of fossil fuels, it lends an importance to solar power."

Important, yes, but the reality is that today only a tiny fraction of U.S. electricity is supplied via solar -- well under 0.1 percent in 2009 -- hardly enough to compete with fossil-fuel generated electricity or get California or Colorado any closer to their targets.

Although solar photovoltaic electricity has reached grid parity in select markets, the high cost of solar has hampered it from becoming a true game-changer. While module costs have come down significantly in the last decade, the balance of system costs -- all the upfront costs associated with a PV system except the module -- remain a barrier to large PV adoption.

"Getting to good economies of scale where solar PV can compete in the market on its own does not require a technological breakthrough," said Stephen Doig, RMI program director. "We actually have all the components and pieces. We just need to drive out the waste in the system, get to scale, and then we will have competitively priced systems. New technologies, or new panels will abet this process, but we don't need to depend on them."