In some parts of the world, solar power is now the cheapest source of electricity in history, thanks to policies encouraging the growth of renewables. That’s according to a new report released today by the International Energy Agency (IEA).
The sun is free, but the technology to turn it into usable electricity can be expensive. To encourage more people and businesses to switch to solar power, countries can adjust their policies to make purchasing such equipment more affordable. Today, more than 130 countries have policies that reduce the cost of building new solar installations. This is the first year that the IEA has taken these policies into consideration when calculating the cost of solar energy in its annual World Energy Outlook. After that, their solar energy cost estimates fell 20-50% per region compared to last year, Slip and carbon reported for the first time.
Solar is fast becoming “the new king of electricity supply,” the report says, as prices continue to fall. It is expected to increasingly dominate the market over the next decade, boosted by global efforts to tackle climate change. The EU, for example, has set itself a target of obtaining 32% of energy from renewable sources by 2030.
“It looks like the political support is here to stay, which is a very good thing,” says Brent Wanner, who leads power generation modeling and analysis for the IEA’s World Energy Outlook. “These policy frameworks are really essential to sustaining these low costs, which then underpin the kind of growth we need to move towards climate ambitions.”
In most countries around the world, it is still cheaper to build solar farms than new coal or gas-fired power plants, the report says. For the large-scale solar projects completed this year, the average cost of generating electricity over the life of the plant (known as the discounted cost of electricity) was between $ 35 and $ 55 per megawatt hour on some of the highest. major markets of the world – the United States, Europe, China and India. Just four years ago, the updated average global cost of solar power was $ 100 per megawatt hour, according to the World Economic Forum. Ten years ago, it was $ 300.
The cost of coal, by comparison, currently ranges between around $ 55 and $ 150 per megawatt hour, according to the new IEA report – about the same where it has been for more than a decade. And the coal industry is in decline despite the Trump administration’s U.S. efforts to support it. Globally, coal use is unlikely to return to pre-pandemic levels even if the economy recovers next year, the IEA predicts.
The forecast for solar in the future, on the other hand, is sunny. Demand for electricity is currently declining due to the pandemic, but the IEA expects people’s appetite for electricity to rebound quickly once the pandemic is brought under control and the economy recovers . He also anticipates a future where solar power will continue to grow at record speeds to meet growing consumer demand.
“The good news about this is that solar technology continues to improve and innovation continues to reduce those costs,” says Wanner.