Can Solar Beat Coal?

More things are happening with solar, this time concerning price, and they could indicate a tipping point between energy from coal and energy from the sun.

Last week there was a lot of news out of China, with extended subsidies for solar power, and China’s two big solar players, LDK (NYSE:LDK) and Suntech Power (NYSE:STP) both making moves. LDK sought increased loans from China Development Bank Corp. to help it reduce the cost of production, as solar panel prices have dropped over the past year due to excess demand. Suntech was putting up solar power, with panels going to feed Saudi Arabia’s energy demands.

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However, the most recent news isn’t out of China, and isn’t about LDK or Suntech, and it may have more global implications.

The world’s largest thin-film solar panel maker, First Solar (NASDAQ:FSLR), recently purchased a solar project in New Mexico called Macho Springs from Element Power Solar. While that alone is not so impressive — many companies can be seen purchasing solar projects — the price that First Solar is looking to sell power at is far more engaging…

A typical new coal plant could be expected to charge $0.128 per kilowatt-hour for its electricity, according to Bloomberg. Generally, power supplied from solar plants would come at a higher rate. But First Solar will be offering energy at a rate of $0.0579 per kilowatt-hour in an agreement with El Paso Electric Co. (NYSE:EE).

Still, it remains uncertain just how First Solar was able to offer such a lower price. There is some speculation that federal and state incentives will support First Solar. Revenue might otherwise dip. A spokesman for First Solar wouldn’t confirm the rate.

Though details are still uncertain, if First Solar is managing to offer such a low rate, it could give the company an edge on other energy providers and may point toward a future where solar begins to overtake coal.

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