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Solar will be the cheapest source of energy in the world in ten years

Solar will be the cheapest source of energy in the world in ten years

By José A. Roca

Last year was another watershed year for solar power, as prices fell to levels that would have been incredible just 12 months ago. Among the most important events of 2016 are three significant records in solar energy prices, the first in Dubai, then in Mexico, and finally in Abu Dhabi, where an offer of 2.42 cents per kWh broke all records for a large-scale project in the United Arab Emirates (UAE).

These milestones have given way to a collective enthusiasm in the belief that photovoltaic solar energy will be the dominant energy source in the future, as shown by updated analyst forecasts for average solar prices in the coming years, with interesting results. The report now presented by BNEF analysts predicts that the global median price for solar power could be less than coal within just 10 years, which isn't really that incredible, considering it's already cheaper than coal in some parts of the world (see Bloomberg chart).


Incredibly, average solar prices have dropped 62% since 2009, with cuts across every link in the industry supply chain, from polysilicon to module manufacturing, and even across the entire balance sheet. technology system (BoS), such as investors and trackers (see chart below). Currently, the average price of installed solar capacity in commercial-scale solar power plants is $ 1.14 per watt, and is expected to fall below $ 1 by 2022, and then to just 73 cents. in 2025, which is when the price of coal is forecast to fall below, according to BNEF.


Of course, the price decline will occur at different rates in different countries, while coal prices will remain low in countries like India and China, which have large reserves of domestic coal. As the largest solar market, China expects PV prices to fall below those of coal in 2030, but by that time most of the world will have already experienced the price transition.

Technological progress

One of the main drivers of the drop in solar energy prices is the progress of the technology used in the manufacturing process and in the balance of the system. This enables a huge increase in solar efficiency when modules are placed in areas with the same levels of solar irradiation. This trend is likely to continue as a significant part of the investment goes to research and development in the industry.

In addition to this, a more mature industry with much more experience is helping to overcome the problems of the past and to promote the adoption of solar energy for the future. Particularly important is the development of economies of scale that allow countries to implement favorable policies for the development of solar markets. Of course, this is not happening everywhere (just look at the UK), but emerging markets are propping up the whole world, having learned from the mistakes made in more mature markets.

A key development noted by BNEF has been the introduction of government bids for the award of long-term power purchase contracts for large-scale projects and also for rooftop solar projects. This is driving competition and forcing solar companies to find innovative ways to keep prices low. In 2017, we can expect a series of solar auctions, which will again test, if not broken, the price limits of the solar industry.

The Energy Newspaper


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