Can solar energy really match the price of fossil-fuelled electricity?

Our piece citing a report by consulting group AT Kearney in Germany on Friday raised a few eyebrows, but there was Prime Minister Julia Gillard on Sunday announcing a new partnership with the United States that aimed to cut the cost of solar to that of conventional sources. This is what she said:

“[This project] is part of an aggressive effort to bring the sales price of solar technology down by two to four times, down to the point where the price of electricity from solar is comparable to electricity generated from conventional sources.

“Now this is an ambitious goal, but anyone who has stood under the Australian sun, even here in Melbourne where sometimes we see (it) and sometimes we don’t, knows how much we stand to gain in we can do this.”

It’s not entirely clear what comparisons Gillard is using — rooftop PV versus coal or utility scale solar versus coal and gas — and grid parity suggests different things to different people. It has, however, long been the holy grail of solar technology developers.

The industry argues it has already reached grid parity in countries such as Italy, which has good sun and high retail energy prices, and islands such as Hawaii that rely on expensive diesel. Despite a 50% fall in PV prices in the past year, it’s considered a distant dream in Australia.

Lend Lease and AGL believe utility scale solar PV will hit a crossover point with wind as soon as 2014. But to match coal or gas — even with a carbon price — is another matter. But if it happens, it is a potential game changer for the future of the energy industry in this country.

So what is behind the idea that the price of solar can be cut by a factor of four? The project announced by Australia and the US — although mostly funded here — will focus on several new so-called “third generation” solar PV technologies, including dual-junction photovoltaic devices, hot-carrier solar cells and — in solar thermal — high-temperature receivers, all of which have the potential to achieve quantum shifts in the level of solar energy efficiency.

Mark Twidell, the head of the Australian Solar Institute, which will manage the $50 million in new funding promised by the Australian government, said dual and multifunction PV devices have shown the potential to more than double the efficiency of PV cells, reaching efficiency rates of up to 45% in university testing, which compares to less than 20% for most silicon-based PV panels currently in use.

The higher rates are achieved through new coatings that can use more parts of the light spectrum. The significance of such a high efficiency rate is that it means less land, less steel, less concrete, and fewer cells, are required to generate the same amount of energy.

Hot-carrier solar cells are designed to improve the conversion rates of solar cells. In the simplest terms, the focus here is to try and herd the electrons and push more of them through with the flow of the current, rather than just having them jumping up and down in the same place and not being converted into energy. The potential is to increase efficiency and to try and do it with low-cost materials.

High temperature receivers are used in solar thermal technology, and are designed to maximise the temperature that can be generated in solar thermal plants, potentially to the same level as the steam generated in coal-fired power stations. That would increase their efficiency and lower their costs by considerable margins.

The project with the US represents a 50% increase in funding for the ASI, which is charged with chaperoning new technologies in the solar industry and helping to get them to the point where they can be commercially exploited.

The ASI next week will unveil its strategic plan, which will focus on areas such as R&D, skills development, knowledge sharing, administration and sustaining the future.

“Our mission is to accelerate the commercial deployment of our solar technology,” Twidell said. “It would be great to look back in 20 years’ time and see those technologies widely deployed in the market.”

And there is some confidence that this can be done. Australia is still a world leader in solar R&D and the chief technology officers of more than half the world’s top 10 solar producers are Australian.

And as Chris Dunstan — the head of research at the Institute for Sustainable Futures at the University of Technology in Sydney – said, cutting the cost of solar to that of conventional energy would not necessarily mean wholesale substitution of fossil fuels, but would be a hugely significant development in efforts to manage loads and peak demand at a considerably lower cost than is now contemplated.

*This article first appeared on Climate Spectator