|Fig. 1: Relative costs of renewable energy.  This figure indicates that both types of solar cost roughtly the same and are at least 2 times more expensive than any other form of renewable energy.|
Solar power is one of the fastest growing sources of renewable power in the US. Michigan alone garnered $4.1 billion worth of public and private investment for projects over the past three years; at the same time, the federal government maintains a 30% investment tax credit for solar installations. [1,2]
With all of this attention given to solar, one has to wonder which solar technology is the most efficient, solar thermal or photovoltaic, and whether any current solar technologies are cost effective.
Both photovoltaic and solar thermal are the two established solar power technologies. Photovoltaics use semi-conductor technology to directly convert sunlight into electricity. Photovoltaics, therefore, only operate when the sun is shining, and must be coupled either with other power generation mechanisms to ensure a constant supply of electricity.
Solar thermal works by using mirrors to concentrate sunlight. The concentrated sunlight is then used either directly as a source of heat, as in solar water heating, or to drive a heat cycle such as a sterling engine. Additionally, since solar thermal only directly produces heat, it can store thermal energy various mediums. Some plants, in fact, can store enough energy for 7.5 hours of generation in lieu of sunlight.  Therefore, solar thermal can potentially generate power 24 hours a day.
There is a long history of utility scale solar thermal generation. Plants were built in the American Southwest throughout the last 30 years.  As of 2004 there is 418 MW of installed solar thermal power capacity installed in the US.  All told, solar thermal energy costs between 19-35 cents per KWh. 
Photovoltaics are a popular energy source both on the utilities side and for residential home use. Photovoltaic capacity has blown past solar thermal power generation capacity. As of 2008, there was 800 MW of grid-connected photovoltaic capacity, or nearly double the amount of solar thermal generation capacity.  Cost per watt for this technology is currently 18-43 cents per KWh. 
At 18-43 cents per KWhr, solar power is one of the most expensive renewable energy sources available. The price of solar vs. other renewable energy sources are shown in Fig. 1. From these figures, it is clear that solar is one of the least cost-effective forms of alternative energy. In fact, the U.S. Energy Information Administration projects that solar power will represent a small fraction of renewable energy generation at least through 2035. 
The economics of photovoltaics, however, may be skewed by implementation issues. First, Germany has the largest market for solar power in the world.  Germany, and much of northern Europe get rouhgly 2/3rd the solar irradiation of Minneapolus and a little more than half the horizontal solar radiation of southwestern US cities like Los Angeles.  Additionally, installation overhead currently form a large portion of the total system price. In fact, as of 2007 the cost per watt of a Photovoltaic power plant could be more than double the cost of the photovoltaic panels.  If these installation costs can be mitigated through economies of scale or other means, the price of solar power has substantial room to drop.
Currently, there is little price difference between photovoltaic and solar thermal energy. Photovoltaics may become more affordable as more photovoltaics move to utility scale installations. Solar thermal power, however, still has the advantage that it can store power.
The technology differences are moot, however, since both solar technologies are currently much more expensive than other sources of renewable energy. Therefore, at present, solar energy is not a cost-effective power generation system.
© Andrew Danowitz. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.
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