Solar power’s leading role in driving the energy transition – and the decarbonization of other sectors required to stave off catastrophic climate change – has once again been highlighted in a major global study.
The International Renewable Energy Agency (IRENA) has published a study that not only signals the end times for coal-fired power, thanks to plunging unsubsidized clean power generation costs, but also indicates how cheap renewables can power the electrification needed to reduce carbon emissions from transport and space and water heating.
“In most parts of the world today, renewables are the lowest-cost source of power generation,” states the first sentence of the Renewable Power Generation Costs in 2018 report. That bold statement is backed up by a prediction that next year some 83% of the electricity generated by new PV capacity will be cheaper than new fossil fuel generation. Based on IRENA’s power purchase agreement and solar auction database, solar will generate electricity at a global weighted average price of $0.048/kWh in 2020. Such a figure would ensure PV electricity would also be cheaper than the marginal costs of power generated from 700 GW of existing coal-fired power stations worldwide.
IRENA reports PV panel prices fell 26-32% between December 2017 and the end of last year, to European prices of around $216/W for the cheapest products, $306 for standard modules, $400 for high efficiency options and $420 for ‘all black’ panels. That in turn led to notable year-on-year falls in the cost of developing solar plants around the world, with India leading the way with PV projects costing a weighted average of just $793/kW of capacity installed. Project costs in China came in at $879/kW last year and Italy saw a fall to $870/kW. The wide variability of global prices was reflected by the fact solar projects cost an average $2,101/kW in Japan and $1,500 in the U.S. and Australia.
Despite such wide price ranges, the levelized cost of solar electricity (LCOE) continued to fall in most regions, with the U.K. and Germany rare exceptions. The end price of solar electricity fell 21% year-on-year in India to $0.063/kWh; 20% in China, to $0.067; and 18% in the United States, to 0.082/kWh. While Japan experienced only a 1% fall last year, to $0.153/kWh, Germany actually saw a 2% rise in the solar LCOE, due to higher project development costs.
Record low LCOE figures recorded in the UAE, Mexico, Peru, Chile and Saudi Arabia showed a price of just $0.03/kWh is possible in many of the world’s sunnier regions as IRENA recorded a global average price for solar power of $0.085/kWh in 2018.