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I'd summarize their argument this way: It currently costs far more per KW to build a solar plant than a fossil plant of the same size. Some of that higher capital cost is recovered through higher margins on power sales because solar plants have zero fuel costs. But as you add more solar plants, those margins compress meaning that solar plants recover less of their higher capital costs all else being equal.
And I agree with that. Essentially it's a long way of saying that it currently costs more to build a solar plant than it does to build a different kind of plant. That's well known.
But the costs of building solar plants are falling rapidly. So it's not right to frame this as some kind of static impediment to solar integration. As the capital costs of solar plants come down, so does this effect.
And if solar can get to a level where it's price per KW of installed capacity is roughly equivalent to that of a fossil fuel plant, this issue goes away completely.
I'm not sure about the absolute comparisons, as you say, they will change over time anyhow. The only point that I'm trying to reinforce here, is that the math shifts as we build LOTs of solar/wind. It can't be simply extrapolated from the paybacks at the lower % levels.
Until we have storage or lots of flexible demand shifting, it seems it will always have an effect. How big is hard to say, but not zero.
I don't agree (in pure economic terms, ignoring the health costs for now) that the issue goes away when solar capacity cost is ~ equivalent to fossil fuel. An intermittent source of power is not worth the same as power that can can run 24/7, and in the case of NG peakers, ramp up and down quickly on command.
I also think that some are overestimating declines in the price of solar. Most of the recent decline comes from the panels themselves. You still have the mounting frames, installation labor, wiring, inverters, permits, etc. The article I linked talks about some of this, like using robot installers, etc (but there goes the 'green jobs' argument!). But I'd guess that most of those costs will not be on the same decline curve as the panels themselves.
I also wonder if we shouldn't be waiting to install solar? If the price is coming down so fast, does it make sense to wait? Let the other countries buy the expensive 'early-er adopter' stuff? Yes, you'd be delaying the health benefits - it's not just an economic argument.
BTW, until we get to that higher level of solar, I'd bet we aren't displacing hardly any coal at all. Solar comes near the peak demand, the NG peakers will be fired up, and solar will displace those first. It's still fossil fuel, but NG is far cleaner than coal, and somewhat lower CO2 as well.
-ERD50