With the U.K. solar market set to see at least some movement in 2019 after its recent stagnation thanks to the removal of supportive policies, the country’s Solar Trade Association (STA) has updated its assessments of solar’s levelized cost of electricity (LCOE) – the cost of electricity per unit over a project’s lifetime. It states that the technology has already defied industry expectations for 2019, and could soon be the U.K.’s cheapest source of energy.
A report published by STA states that in spite of policy obstacles, such as the EU’s extension of tariffs on solar imports up to September 2018, as well as the increase of taxes on solar generation, and the removal of the renewable obligations scheme by the U.K. Government in 2017, solar’s LCOE has fallen significantly faster than its 2014 predictions.
“This is yet another example of the fast-moving solar power market outpacing official costs analyses. Our aim here is to provide an accurate assessment of where large-scale solar costs stand as we enter 2019, when we hope to see some revival of the UK large-scale solar market,” says STA policy analyst Nicholas Gall. “We urge decision-makers to understand how effective policy frameworks enable the lowest possible costs for solar, which will greatly benefit consumers.”
The report estimates solar’s LCOE in 2019 at between GBP 50 and GBP 60/MWh, noting that this already makes it competitive with gas and onshore wind. The figure is far lower than STA’s 2014 predicition of GBP 80/MWh, which it notes was made on the assumption of the removal of tariffs in 2016 and continued stability regarding policy and financial support.
With the correct policies in place, STA now states that solar generation could reach costs as low as GBP 40 by 2030; and calls on the government to introduce policies including technology neutral auctions, reforming rules for network access and supporting the commercial sector through a climate change levy exemption for renewable energy procured through a corporate power purchase agreement.
“We have a clear message for government and corporate energy buyers today: UK solar electricity is now cost competitive with fossil fuels,” says STA Chief Executive Chris Hewett. He adds, “By establishing the right policy framework for solar and storage, government can enable this technology to realise its full potential in delivering an affordable, low carbon future energy system.”
In markets with high insolation rates and other advantages, solar has already achieved prices lower than $30/MWh, and while costs in Europe remain a little higher than this, there is still plenty of potential for these impressive cost reductions to continue. Solar and wind are already said by BloombergNEF to be the lowest cost energy source in most of the world’s major economies.
According to a study released yesterday on achieving 100% renewables in Europe by 2050, the researchers forecast that LCOEs are predicted to “substantially” decrease in Europe, from around €80/MWh in 2015 to around €57/MWh by 2050.