5 Alternative Energy Sources That Are Cheaper Than Solar

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Is solar power “the fuel of the future”? Elon Musk thinks so.

The co-inventor of PayPal, now turned alternative energy rock star, has built two companies — solar power utility SolarCity (SCTY) and electric car company Tesla (TSLA) — around the idea that solar-generated electricity is the way to power our cars and save our environment. He’s also working on a third company — SpaceX — which aims to bring mankind a bit closer to that ultimate clean-energy source, the sun.

But is solar power truly the solution to our energy needs? Not necessarily.

‘Free’ Power Can Be Awfully Expensive

Last month, alternative energy analyst Gordon Johnson at Axiom Capital crunched the latest numbers out of the U.S. Energy Information Administration, and published a report on his findings.
The upshot: When it comes to “alternative” ways to generate electricity, solar energy is just about the most expensive form of energy you can get.

Calculating the cost of generating a kilowatt hour of electricity by tallying the cost of building a facility, operating it, and paying for the fuel it consumes — then amortizing all this across all the electricity it’s expected to produce in its lifetime — Johnson points out that solar photovoltaic power costs about 22 cents a kwh. Solar thermal power, where sunbeams are reflected and concentrated on a heat-retaining medium such as salt or graphite to store heat for later use in generating electricity, costs even more — about 32 cents a kwh.

What forms of energy are cheaper than these? Pretty much any that you might think of.

Electricity generated by running water through a dam’s turbines costs about 9 cents a kwh generated. That’s less than half the cost of electricity generated from “ordinary” solar panels. More than three times less than solar thermal power. And hydropower may be even cheaper than what the EIA says it is.

The Hoover Dam, for example, is said to wholesale the electricity it generates for as little as 1.6 cents a kwh — about a penny-and-a-half.


Say what you will¬†about the downsides of wind power — that windmills kill birds and bats, that they allegedly induce headaches in their neighbors — one thing’s for sure: Wind power is a whole lot cheaper than solar.

EIA estimates say that amortized over their lifetime, windmills generate electricity for a cost of just 10 cents a kwh on average — on par with hydro, and far cheaper than solar.

Across the ocean, the European Wind Energy Association claims that some of its member projects are generating electricity at a cost of as little as 5 cents a kwh.

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