Sunny regions could see one-cent solar within a decade

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From pv magazine USA.

The relatively low penetration of solar power generation in the global energy mix has prompted a U.S. technologist to predict the solar learning curve will lead to one-to-two-cent solar in “reasonably sunny” regions by 2030-35.

Clean energy investor and and technologist Ramez Naam extrapolated the decade-long price of electricity generated by utility scale solar projects built since 2010, and intended to come online up to the end of the year. With solar modules already following the path predicted by Wright’s Law – which suggests each doubling in manufacturing output leads to a fixed decrease in production costs – panel costs typically fall by a quarter for each doubling in production.

Naam examined global average non-panel costs – plus those in India, China and the U.S. – which contribute two-thirds of the levelized cost of energy generated by solar plants, and applied Wright’s Law to conclude the solar electricity price falls 30-40% for every doubling in deployment of solar generation capacity.

Historic price falls

“Solar has plunged in price faster than anyone, including me, predicted,” said Naam. “And modeling of that price decline leads me to forecast that solar will continue to drop in price faster than I’ve previously expected, and [it] will ultimately reach prices lower than virtually anyone expected. Prices that are, by any stretch of the measure, insanely, world-changingly cheap.”

Such price falls would see solar pass the tipping point for the energy transition when new solar projects are cheaper to establish than the running costs – marginal cost – of existing fossil fuel power generation facilities, even in an age of ultra-cheap natural gas.

With solar making up only 2% of the global power mix at the end of 2019, according to Naam, he expects the learning curve, or experience curve, which results from the application of Wright’s Law to continue at the same rate through at least two more doublings of PV capacity deployment, to a point when 2.4 TW of solar supply what would be 8% of today’s electricity demand. By that stage, Naam posits, the cost of solar electricity will have halved from today’s level.

The bottom line

“In the sunny parts of the world with low costs of capital, labor and land,” states Naam’s study, “we could routinely be seeing unsubsidized solar in the $0.01-0.02/kWh range. In California … we could be seeing unsubsidized solar at $0.025/kWh. In northern Europe, we could be seeing utility scale solar routinely priced at $0.04-0.05/kWh.

Naam pointed out solar costs are already 30-40 years ahead of the International Energy Agency’s (IEA) forecast in its 2014 Solar Technology Roadmap and 7-10 years ahead of his own ambitious forecast in 2015, which only used data from the Lawrence Berkeley Lab and the U.S.

The IEA claims it publishes potential scenarios for future solar deployment, rather than forecasts, to illustrate what effects public policy could have.

“While it’s clear that new policies have made a difference in deployment,” said Naam, “it’s also clear that, whatever you expect in terms of global energy policies, cost is a massively important fact. You can’t expect to forecast the growth of a technology if you consistently expect it to cost 2-4 times what it does.”

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1 comment

  1. Leading new solar deployments are already cheaper than the operating costs of coal plants in India and much of the USA. The interesting issue is gas. Fossil gas prices are extraordinarily low at the moment, and much of the US fossil gas industry is bankrupt by any normal standards. These ultra-low prices may persist for a year or two, bur are unsustainable in the long run. Prices must eventually rise to a level which ensures a normal return on capital. Utilities would be mad to invest in new gas capacity with a 25-year life on the assumption that current gas prices will persist. The question is when solar + storage will be at parity with a normal gas price. Some say, it is already there

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