I did enjoy last nights discussion. They were not, however, correct about the economics of PV.
It is true that the total cost of electricity produced via household PV installations is ~0.25/(kwH)--which is very competitive with the price of power delivered in many metropolitan areas. There are two critical factors. 1) variability and 2) supply and demand.
1) We all know that grid power is incredibly reliable. To make a household PV installation as reliable as grid power, then one would need household storage and 2X-3X PV-power capacity. Storage and extra capacity will significantly increase the cost of PV electricity.
2) At $0.25/kwH delivered (~$0.12/(kwH produced)), most power producers are making huge profits because, as we all know, every power producer gets paid the market clearing price. Therefore, as household PV is adopted, peak demand will fall. As peak demand falls, the market clearing price will drop and the current price of PV will no longer be competitive.
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I'm not sure I agree...
(1) Certainly if you want to power your entire house on just PV, storage will be necessary. However, is this not worked into the calculated price of $0.25/kWh? Clearly, if that was not included in the calculation, then PV for a grid-independent household will be more expensive. For a grid-connected PV house, with minor storage, one can still "play the grid" and essentially participate in peak shaving. This latter idea only makes sense if consumers actually pay the spot price on an hourly basis... which they don't.
(2) I think this is a minor point; PV is still a very small fraction of all power delivered, and if you simply combine the expected growth of power demand with the lack of new power generation and distribution plans, we are far removed from any prices dropping due to the introduction of more PV.
I have to say I agree with Ernst.
1) No power plant is as reliable as the grid, and the smaller they are, the less reliable they need to be. The economics of off-grid power are completely different, and vary widely by application. If you put your solar panels on the grid, you are one of many power plants and one of many loads - with the benefit that you don't have to pay transmission/distribution to yourself (plus the subsidy of getting paid t/d for any excess you generate, if you have net metering... but even this makes sense if solar is sparse, as you are only distributing to your neighbors)
2) I don't think this is really true either, or with such a big profit motive we'd see more power plants. I think plants bid at their marginal cost and have to hope the excess they get paid covers their fixed costs. Of course, deregulation hasn't been around for too long, and there are other reasons it's hard to build power plants, so I could be wrong about the profits...
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