And the other carbon-generated electricity.

The issue with solar is this. If you put in a roof full of panels, you fix your cost. Typically today people would put in a system at a cost like $8/watt fully loaded. (They usually reduce this with rebates and tax credits, but let’s look at the real cost.)

If you amortize the panels over 30 years, that works out to about 32 cents/kwh, which is why few do it today without the rebates and tax credits. If they get it down to $4/watt it’s 16 cents. (This is at 7% interest.)

Problem is, 10 years down the road, you will get panels for less, and so will power companies. With power companies you pay grid transmission costs today, though the real ideal design for solar is local mini-grids where the power doesn’t come very far. Alas, we can’t choose our electricity provider here in California any more but it could happen again.

So you’re stuck paying off your 2007 PV investment when you could be getting power for less. That’s why it matters what you paid for them. They will depreciate far more quickly than you hoped. If you sell your home, people will only value the PV system for how much the electricity it generates costs at the sell date, not at what you paid when you install them.

Obviously supply and demand will apply to panels. They won’t get cheap unless there is good supply to meet demand. But that should happen in a free market.

If you don’t think solar will get cheaper, then you can ignore all this of course.

As you note, the other possible outcome is we start jacking up the price of coal and other carbon burners to factor in their broader cost. This would of course make solar more competitive, along with other cleaner technologies. I’m not holding my breath — though with all the coal being burned, I probably should be.