Scientific American’s March 2009 issue contains a survey of the status of alternative types of electricity generation. The author estimates the cost of solar electricity at between 46.9 and 70.5 cents per kilowatt-hour (kWh). This seems quite high to me. I have been subscribing to Home Power for many years and would be interested to learn your present estimate.

Carroll Swain • via e-mail

The per-kWh cost of PV electricity is calculated by dividing the cost of the complete solar-electric system by the system’s energy output over its lifetime. So the cost will vary depending on system size, type, and location. Other expenses include design and installation, maintenance, and financing.

Total system energy output is measured by multiplying the rated power of the modules by the peak sun-hours for the location, and by applying an efficiency factor based on the type of system (batteryless or battery-based). Multiplying this by the PV system’s estimated life span (in years) will give the system’s estimated total lifetime output.

The calculations in the table are based on a 20-year system life span (which is conservative; other methods for estimating total PV system output use 30 years) and do not adjust for any incentives available. If both of these factors were incorporated, the estimated per-kWh cost would be reduced accordingly. (Also note that the 2 kW system example includes battery backup, which lowers system efficiency and yields a higher per-kWh rate compared to a 2 kW batteryless system.) Utility-scale systems produce electricity even more cheaply—a 12.6 MW solar-electric power plant in sun-drenched Nevada produces solar electricity at only 7.5 cents per kWh.

Compare these prices with retail grid electricity. Southern California Edison’s prices range from about 10 to 37 cents per kWh depending on the amount used by customers. Peak electricity in California can cost as much as 42 cents to commercial users. Hawaiians pay more than 21 cents per kWh for residential use; commercial customers are charged almost 20 cents per kWh. Hence, in many situations, PV systems today already produce electricity cheaper than the grid. And barring battery or inverter replacement, a solar-electric system is a fixed, up-front investment, while most analysts expect utility electricity prices to continue to rise.

John Perlin • Author, From Space to Earth: The Story of Solar Electricity