Many people are quick to label the possibility of solar power becoming a significant source of energy as a very distant possibility. I want to convince you here that a solar based energy grid is the most likely culmination of the current human and market pressures on energy production, and it will take off sooner than you think. I am currently invested in solar power and will hold the stock (Sunpower Corporation: SPWRA) likely for the rest of my life. Here's why:
Economic Pressure:
Most of our energy comes from Oil, Coal, and Natural Gas. We currently use them simply because they are economical. However, they are bound to increase in cost due to the fact that as these resources become more scarce, new and more expensive methods are necessary to extract them. (oil sands, deep sea drilling) In contrast, the more solar we use, the cheaper it becomes. This is due to economies of scale as well as the maturation of the technology itself.
Demand Pressure:
Because demand for energy is growing globally, we will use up the cheap and easily accessible fossil fuel reserves more quickly. This will hasten their increase in price and make them less economical. Solar does not suffer from this problem. Silicon's availability is predominately a function of our ability to refine it rather than of its availability in nature (It is the second most common element on the earths crust).
Environmental Pressure:
Whether or not you believe in global warming, you probably agree that smog is not the most pleasant or healthy experience. And I think most reasonable people would concede that pouring CO2 into the atmosphere is not good for the planet. The negative environmental consequences of fossil fuels make solar power a more desirable method of collecting energy, all else being equal.
Political Pressure:
Energy independence is something desired by every government. Particularly by the US who would prefer not to funnel more money into the middle east given a choice. Since politicians make the laws, it's safe to say that when solar becomes more economical, politicians will certainly get behind it.
It's difficult to say when we will shift to a predominately solar grid, but it seems likely that it will happen. When it does happen it, it is likely to happen quickly for this reason. Lets say that its 2015 and the cost of electricity from coal is now on average $.15/kwh. The cost of solar has come all the way down to $.14/kwh. While this difference is not enough to convince everyone to go solar, some environmentalists and penny pinchers will start the shift. As these people purchase solar panels, the economies of scale increase further driving down the cost. The further cost reduction will make going solar attractive to more people. This process occurs recursively resulting in an exponential growth of solar power.
I've been far from empirical in my analysis, and I instead wanted to outline some very general trends and their likely consequences. I welcome readers' opinions as well as any supporting or falsifying data you may have regarding this conclusion.
Well written
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