McKinsey folks write,

During the next three to seven years, solar energy’s unsubsidized cost to end customers should equal the cost of conventional electricity in parts of the United States (California and the Southwest) and in Italy, Japan, and Spain.

From now until 2020, installed global solar capacity will grow by roughly 30 to 35 percent a year, from 10 gigawatts today to about 200 to 400 gigawatts…Even though this volume represents only 1.5 to 3 percent of global electricity output, the roughly 20 to 40 new gigawatts a year of installed solar capacity would provide about 10 to 20 percent of annual new power capacity over that period.

Let’s extrapolate this forward. Suppose you start with 200 gigawatts of solar in 2020, and it grows at 30 percent per year beyond that. In 2030, you would be at 2757 gigawatts. In 2040, you would be at 38009 gigawatts, which is plausibly at least much as total global electricity output would look like under a modest growth scenario. (If total electric output in 2020 is 13333 gigawatts [200/.015] and it grows at 5 percent per year, it will be at 35377 gigawatts in 2040.)

Obviously, you hope that solar power can sustain those sorts of growth rates for that long. If you believe it, then you should short those long-term oil futures contracts.

Pointer from Fazeer Rahim.