Report: Solar to Power 10% of the U.S. by 2025

Solar energy is one of the most abundant resources out there, but how much electricity can we realistically expect to get from it over the next two decades? A new study estimates that between photovoltaics and concentrating solar power, enough could be produced to meet 10 percent of the U.S.’s electricity needs by 2025. Currently, solar power accounts for less than one-tenth of a percent of America’s energy production.

The study, conducted by Clean Edge and Co-op America, contends that utility involvement is key. Utilities, with their access to cheap capital and long time horizons, are said to be indispensable to scaling solar; one industry insider is quoted as saying: “To really scale [solar] it’s all about utilities.”

But utilities will have to work with solar startups and energy regulators, each of whom has their own part to play. For startups, the goal is to “bring installed solar systems costs to $3 per peak watt by 2018,” according to the the report. Meanwhile, regulators need to fashion policy that allow utilities to develop large-scale solar projects.

The study predicts photovoltaics will maintain double-digit growth much the same way chips did over a two-decade period. At a compounded annual growth rate of 33 percent, installed PV could jump from 865 megawatts in 2007 to well over 200,000 megawatts by 2025. Meanwhile, with a growth rate of 28 percent, concentrating solar power could grow to over 40,000 megawatts.

And what would all of this solar cost? No more than what we’d have to “pay for more traditional and polluting sources such as coal- and natural-gas-fired plants, and we believe, considerably less than the price tag for a similar amount of nuclear power or coal power (in a carbon-regulated environment),” the study says. In other words, 250+ gigawatts of solar power by 2025 would cost between $450 billion and $560 billion, or about $30 billion per year. Edison Electric Institute estimates that utilities spent $70 billion in 2007 on power plants and distribution.

How much of those billions will solar startups see? And how many different solar players will be able to cash in? There is currently plenty of demand. The best bet for solar startups is to continue courting utilities and keep inking power purchase agreements with clean energy-hungry power companies.