Study finds that solar will be most inexpensive form of energy by 2025
Although solar energy for the use of electricity is still not widespread, a new report may change perception on the source of power. According to the report, conducted by Agora Energiewende, solar is quickly becoming the most inexpensive source of energy.
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Credit: Oliver Herold |
The cost of solar, especially upfront expenses, is seen as one of the biggest hurdles to solar integration, but the study found that may change. Due to technological innovations and awareness of solar -- including integration worldwide as well as solar farms -- the price of solar is dropping.
"Since its first application in space missions in 1958, solar photovoltaics technology has come a long way," said Dr. Patrick Graichen, director of Agora Energiewende. "In Germany, a breakthrough in costs was observed over the last years, following a decade of massive investment in research and deployment. New solar photovoltaic power plants in Germany today cost almost 80 percent less than those built several years ago.
According to the study, in Germany, cost of power from large scale photovoltaic installations fell from more than 40 cents per kilowatt-hour (kWh) in 2005 to 9 cents per kWh in 2014. The study also found that, by 2025, producing solar in Europe will only cost around 4 to 6 cents per kWh -- and 2 to 4 cents per kWh by 2050.
However, in sunnier areas of the world, the costs were found to be even lower. In Dubai, a power purchase agreement for a 200 megawatt (MW) solar farm was recently signed for $5.84 cents per kWh, and Brazil and Uruguay reported solar production costs at or below 7 cents per kWh. According to the report, "these power generation costs largely confirm the notion that the cost of building and operating a large scale solar photovoltaic power plant is comparable around the world, once market barriers are removed."
They also found that regulatory environments will be responsible for solar's success in many areas -- causing up to 50 percent higher cost for inadequate regulations.
"While some industry experts today proclaim the arrival of a 'solar age' that will completely change the way how power systems look like in all corners of the world, other experts expect an end in the decline of prices and thus see an end to the 'solar bubble,'" Graichen added. "This uncertainty poses a challenge for policy makers, as an evaluation of policy choices often requires analysis of future scenarios, including scenarios for the distant future."
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