# China Reducing Solar Costs

- Link: https://greenlivingguy.com/2014/07/china-reducing-solar-costs/
- Published: 2014-07-23T14:11:13-04:00
- Author: greenlivingguy

Many people, even fanatical advocates of solar power, are unaware quite how close
we are to reaching a critical milestone in the industry. Within a fairly short space
of time, solar generated electricity will be fully cost competitive with coal-powered
electricity — at least if the governments of the world’s two largest energy consuming
nations have their way.

Both the U.S. and China have a stated goal of reducing the cost of solar generated
electricity to that level, and quickly. How they are going about it [says a lot](https://greenlivingguy.com/2010/02/stanich-sister-journey-a-lot-to-say-fashion-and-sustainability/)
about how each economic system works.

## China is Definitely Reducing Solar Costs

In the U.S., despite the complaints of some that a drift toward government control
is taking place, private initiative and free markets still rule. The Department 
of Energy launched the [SunShot](https://www.energy.gov/eere/solar/goals-solar-energy-technologies-office)
initiative in 2011. It’s with a stated goal of reducing the cost of solar power.
Essentially to be fully competitive with conventional energy sources by the end 
of this decade. The [program funds grants](https://greenlivingguy.com/2022/03/blink-charging-awarded-grant-funds-to-deploy-dc-fast-chargers-by-the-massachusetts-ev-department-of-environmental-protection-under-the-massachusetts-electric-vehicle-incentive-program/),
incentives and competitions. That’s to encourage private sector research that will
improve the efficiency. More importantly, it will also lower the cost of solar energy.

The Chinese, faced with what is in many ways a more urgent need to achieve the same
thing. For they have taken a different approach. In a manner more in keeping with
their history and current economic system. Essentially they are beating the problem
over the head with piles of cash until the desired outcome is achieved. It looks,
[if this excellent Michael Sankowski piece](https://web.archive.org/web/20170318224702/http://monetaryrealism.com/china-asks-how-much-will-it-cost-us-to-make-solar-cheaper-than-coal/)
at Monetary Realism is to be believed, as if they are getting mighty close.

### Chinese Reducing Solar Costs: Cheaper than Coal

Sankowski maintains that, driven by high levels of pollution and national security
concerns, the Chinese government asked a question back in the early 2000s: “How 
Much Will It Cost To Make Solar Cheaper Than Coal?” The answer was based on[Swanson’s Law](https://en.wikipedia.org/wiki/Swanson%27s_law)
that states that every doubling of photovoltaic (PV) solar capacity results in a
20 percent reduction in unit cost. Testing that theory, because of low levels of
[production at that time](https://greenlivingguy.com/2011/06/for-the-first-time-american-homeowners-can-find-roxul-insulation-products-on-retail-shelves/),
would only have cost around $10 billion — a small price to pay for the chance of
cheap, clean energy that didn’t rely on importing coal from Australia.

When Swanson’s Law still worked after a couple of doublings of capacity the Chinese
[government stepped up their efforts](https://greenlivingguy.com/2010/12/governments-effort-to-derail-epa-rulemaking-is-based-on-numbers-that-do-not-add-up/).
As a result, Suntech [now expects](https://www.telegraph.co.uk/opinion/) the goal
to be achieved by 2016, or 2017 at the latest. That’s right: 2016. A couple of years.
Of course, Suntech has an interest in exaggerating somewhat, but even so, that is
stunningly close.

### Coal Accounted for 69% of China’s Energy

According to the U.S. [Energy Information Administration](https://greenlivingguy.com/2016/04/wte-waste-to-energy-transforming-trash-to-power/),
coal accounted for 69 percent of China’s energy production as recently as 2011. 
Cost comparative solar power and a centralized government committed to change will
make that number laughable in a few years.

It should be borne in mind that reducing the cost of solar electricity to parity
with coal in China is not the same as it is in America, if for no other [reason than that electricity](https://greenlivingguy.com/2020/10/electric-car-sales-4-reasons-a-buzz-next-decade/)
in general, and coal-powered electricity in particular, is more expensive in China
than in the US.

### SunShot for China

SunShot, however, has also been successful, and claims a 60 percent reduction in
cost since its inception three years ago. Many believe that their stated goal of
solar power at $0.06 per kilowatt hour (kWH) is achievable by 2018. Some of that
cost reduction is no doubt down to China ramping up capacity at such a rate and 
flooding the market, but there have been technological advances over that time, 
as well.

You can argue all day about which approach is correct. History shows us that innovation
from the private sector is the most effective, long lasting change agent there is,
but the Chinese approach of heavily subsidizing a massive increase in PV production
capacity has been effective. Unfair, short sighted and disruptive, maybe, but effective
nonetheless.

Command economies may be [terrible at some things](https://greenlivingguy.com/2019/06/5-terrible-things-that-happen-when-you-dont-recycle/)
but when the rapid marshalling of resources is needed to solve a problem they can
be very good at doing whatever it takes.

The simple fact is that with both innovation and increased capacity, the cost of
solar energy has fallen considerably over the last few years and continues to do
so. If, as looks likely, it does become truly cost comparative with coal in the 
next few years, then the days of cheap, clean, [renewable energy dominating the world’s](https://greenlivingguy.com/2020/01/costa-rica-to-become-the-worlds-first-zero-carbon-country-reports-climateaction/)
two biggest energy markets may be closer than you think.

Source: [http://oilprice.com/Alternative-Energy/Solar-Energy/China-Might-Be-Winning-The-Race-To-Reduce-Solar-Costs.html](https://oilprice.com/Alternative-Energy/Solar-Energy/China-Might-Be-Winning-The-Race-To-Reduce-Solar-Costs.html)

By Martin Tillier of [Oilprice.com](https://oilprice.com/)

 

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 greenlivingguy

 The Green Living Guy, Seth Leitman is an independent power producer, a green living
expert, and Editor of the McGraw-Hill, TAB Green Guru Guides. Seth is also an Author,
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Green Living Guy writes about green living, green lighting, the green guru guides
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