The Death Spiral of the Utilities Starts in Hawaii

[Benton D Struckcheon]

Interesting post on the blog of someone I follow on Twitter. His take, which I haven't seen elsewhere, is that solar doesn't have to be competitive with the cheapest or even the average cost of electric generation. It only has to be competitive with the peak cost in order to be economically viable. BUT, as it's installed to answer peak demand, it causes its own costs to decline through the simple logic of spreading fixed costs over a larger and larger production run, causing a virtuous circle for solar, and a vicious one for utilities.
To quote:

Solar doesn’t have to compete with the cheapest electrical base load plants. No, Solar only has to compete with the most expensive forms of electricity to be adopted enough to push prices down to near grid parity. 8 cents per kwh is a low enough price to crush the price of “peaker” electricity.
Peaker energy can cost as much as 10 times as much as base load electricity. PPE charges companies $1.20 per kwh for peaker energy! It’s commonly accepted natural gas peaker electricity costs $.18 per kwh. It’s common for peaker to cost twice as much as regular base power, and 4 times as much is common too.
This peaker power is demanded on the hottest, sunniest days of the year – exactly when Solar is best at producing energy.
8 cents per kwh is easily cheap enough to be cost competitive with peaker electricity. If a company has a choice between installing Solar and installing a peaker natural gas plant, Solar can be an economic choice, even before incentives.

Lots more at this link. Very much worth reading:

http://monetaryrealism.com/the-solar-powered-death-spiral-for-utilities-begins-in-hawaii/