In 47 U.S. states, solar-generated electricity will be as cheap or cheaper than conventional electricity in just two years, according to a new report from Deutsche Bank.
As solar is on the rise, the price of oil is in decline – traditionally a bad sign for renewable technologies, as cheaper fossil fuels have previously translated to waning interest in alternative fuel investments. Currently, oil is valued at $80 per barrel, a low unseen in the U.S. since June 2012. Goldman Sachs has predicted that the price will continue to fall to at least $75/bbl by next year.
This decrease in oil prices would seem to be a bad sign for solar, but Deutsche Bank says that, for the first time, solar’s momentum has pushed it beyond fossil fuel’s influence. That momentum, says Deutsche Bank’s Vishal Shah, will accelerate in 2015, with both residential and commercial markets growing over 30 percent.
Today, solar has reached grid parity in 10 states that collectively produce 90 percent of U.S. solar electricity. These states are set to install as much as six times their current solar capacity in the next three to four years, according to the new report, due to its convenience, affordability and improvements in the technology.
There are many differences between solar and petroleum but the most important one to remember is that solar is a technology and oil is a fuel. Whereas solar will continue to become cheaper and more efficient over time, fuel has the opposite effect – becoming more expensive and less efficient as the cost of extracting it rises in relation to its dwindling reserves.
Currently, solar development in the U.S. has the added benefit of a 30 percent tax credit, which significantly cuts down on installation costs. This credit will expire in 2016 if Congress fails to renew it. However, Deutsche Bank claims that even if the tax credit drops to 10 percent in two years, solar will still be on track to reach price parity with conventional electricity in 36 states.
In September, the International Energy Agency predicted that solar power would become the planet’s top energy source by 2050. This week, Dennis Gartman pronounced the oil era to be at an end. Today, these collective forecasts signal a bright future for solar electricity.