Chu says big solar soon to be cheaper than coal and gas by Giles Parkinson

After  reading the resignation letter from the US Secretary of Energy Stephen Chu, a statement of such vision that you wonder why it is not catchy, one immediate question leaps to mind: So why can’t Australia have an energy minister like this? At either state of federal level?

Before we try and answer that, what does the energy chief of the world’s largest economy and energy user have to say about the challenges and possibilities in front of us?

The biggest takeout is the cost of big solar. One of Chu’s big initiatives was the SunShot program – launched just over two years ago with the aim of taking the cost of utility scale PV down to $1/W by 2020, at which price it would deliver energy at a levelised cost of energy (LCOE) of around $60/MWh, cheaper than coal, and cheaper than gas, even with the shale and fracking boom.

“When we first discussed this goal, industry did not take it seriously,” Chu writes in his letter. “Today, they tell me that our input challenged them to rethink their road maps and now agree that it is an achievable goal.”

It is not as wild as it may seem. Bloomberg reports that First Solar has signed a power purchase agreement to deliver energy from a 50MW solar PV plant in New Mexico to the local utility for $69/MWh. That’s nearly half the cost of new coal plants. It’s likely assisted by investment tax credits, but the clear sign is that it is getting close.

The second big change Chu predicted was in the deployment of electric vehicles. Even if some sales expectation have fallen short, there are nearly 500,000 EVs and hybrid cars in the US, and Chu says the batteries developed for these vehicles will also revolutionize the electrical distribution system and the use of renewable energy.

And, as we have been banging on for a while (and been mocked by many within the industry for doing so), Chu notes that the combination of cheap solar, battery technology, and the arrival of  wind energy at grid parity in less than a decade means that new business models for the energy market need to be developed.