Solar energy vs. fossil fuels: how do they compare?

fossil fuels vs solar energy graphic



Solar energy vs fossil fuels

In terms of environmental impact, solar power is a much more optimal resource than fossil fuels. In terms of reliable application, coal and natural gas have the edge. The ultimate way to compare these two energy types is by cost, where solar has quickly caught up with its nonrenewable counterparts.

Is solar power cheaper than coal and other fossil fuels?

Comparing the cost of various energy sources is far from simple. Government subsidies play a major role in shaping the growth potential for a new power source, which means that making an “apples to apples” comparison of the costs of solar energy vs. fossil fuels side-by-side is a complicated task.

G20 vs the U.S.: the fossil fuel paradox

The nations of the Group of Twenty (G20) may have agreed to begin phasing out fossil fuels in 2009 due to its inefficient and polluting qualities, but not every G20 member is following through on its word. According to Oil Change International’s report, while the G20 makes up more than 85% of global GDP, these top economies are spending $452 billion every year to subsidize fossil fuels.

Curious to know who is the largest contributor of fossil fuel subsidies in the world? The answer is right here at home. The United States has continued to subsidize fossil fuels at a higher rate than any other nation in the world, even under the environmentally progressive Obama Administration. With fossil fuel advocates already lined up for the incoming Trump Administration, the next era of American energy will likely continue on its same course of heavy fossil fuel subsidization.

How energy subsidies play the biggest role

When we compare the cost of solar energy vs. fossil fuels, we have to factor in the relative subsidies that are keeping costs low. In the case of solar power, the Investment Tax Credit (ITC) currently covers 30 percent of any U.S. solar installation and will do so until 2021 for the residential sector. The commercial sector will retain a permanent 10 percent tax credit for solar.

While renewable energy skeptics have criticized the ITC for being a costly taxpayer-funded stimulus, the reality is that this short-lived subsidy represents only a small fraction of the money that U.S. taxpayers are spending each year to subsidize fossil fuels. Without any subsidies, solar is likely the cheapest energy source in the world, as demonstrated by record low power purchase agreements in countries like the United Arab Emirates and Chile. And solar’s low cost trajectory is likely to continue: unlike oil, gas and coal, solar PV is a technology not a fuel – meaning that its costs will continue to fall every year as research continues and technology improves.

The best way to compare solar energy and fossil fuels without subsidies is to examine global energy prices. Consider this: global coal prices have historically averaged $0.06 cents per kilowatt hour (kWh). Until the past decade, no alternative energy resource came close to rivaling that price. Fossil fuel steam averages around $0.05 cents/kWh and small scale natural gas can go as low as $0.03 cents/kWh. It’s no wonder that the world was shocked in 2016 when a major commercial solar installation bid the lowest price for PV to date at $0.029 cents per kWh – effectively leveling the playing field between solar and fossil fuels’ cheapest offerings.

solar vs. fossil fuels

As a result, the discussion of whether solar is cheaper than coal has already become a outdated debate. Today, energy companies are developing solar PV projects that can deliver energy at half the cost of coal, and that’s without factoring in the costly negative impacts of coal – such as heavy carbon pollution, strip mining, and mountaintop removal.

solar energy vs fossil fuels

The advantages and disadvantages of solar energy vs. fossil fuels



Ground excavation begins at a fracking site in Ohio in order to pump shale gas out of the ground

The full list of fossil fuel “cons” is fairly well understood, save for one: the cost and detriment of creating its production plants. Simply put, the operating costs associated with producing fossil fuels dramatically outweighs the operating costs of producing of solar energy.


Comparing fuel to technology: why the difference matters

The benefits of solar energy vs. fossil fuels offers a long list of reasons for a home or commercial property owner to consider. However, like fossil fuels, solar energy offers both pros and cons. On the positive front, the reality of solar as a source of green power and a non-pollutant is a major benefit for any mass energy source that will be produced at scale. Additionally, renewable resources are ideal because they replenish and are not scarce resources, which can create conflict, cause price volatility or even lead to war. This aspect of solar power is evident, but the fact that photovoltaics are a technology – not a fuel – is not.

While fuels are tangible commodities and must be produced, treated and transported, solar PV is a technical innovation that involves silicon cells converting sunlight into energy at a highly efficient rate. This is why people are so excited about solar as an energy solution: fuels have an innovation cap whereas technologies improve constantly over time.

india solar power plant

The world’s largest solar power plant – it went live in India in 2016. Solar PV can start producing readable alternating current (AC) energy the moment the inverter is activated.

You may be familiar with Moore’s Law observing that computer processing power doubles every year, which means that technical innovation will occur at an exponential rate over time. In turn, the costs of that same technology will also exponentially decrease over time.

A version of Moore’s law can be applied to solar power as well, as illustrated by the “hockey stick” growth of PV that occurred in the past decade while prices have plummeted. The true excitement lies in solar’s potential – it is already cost-equivalent to fossil fuels without subsidies, and there are still cost-cutting opportunities to come through efficiency improvements.

The same principle simply cannot apply to a fuel that must be burned; the natural chemical process of a resource being burned cannot “innovate” over time. Like whale oil before it, the value proposition of today’s fossil fuels peaked many decades ago. This doesn’t mean the world economy will stop relying on them tomorrow, but as renewable energy technology continues to dramatically improve, the end of fossil fuels approaches.

The only real “con” to solar is that it isn’t universally accessible yet. Today, not every roof type is ideal for solar, and the payback period is not low enough to attract every income bracket. Energy storage solutions must be improved for solar so that it can become an affordable energy option for all homeowners, 24 hours every day. In addition, although existing policies already make solar a smart investment with a high rate of return today, the technology needs to continue its quest towards ever-lower costs to win the battle of tomorrow.

Luckily, the solar industry is already on its way to overcoming these hurdles through advanced research and development to improve PV hardware, as well as smarter uses of software to easily bring buyers and sellers together. For those curious about what a solar installation would cost, this Solar Calculator can offer a personalized estimate based on your roof and local quotes in your area.


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