Solar Power To Become Cheapest Source Of Energy In Many Regions By 2025, German Experts Say
Solar power still amounts for a small share of net electricity generation around the world. In the USA, for instance, as of December 2014 it was responsible for just 0.45% of the total electricity produced.
Things are changing quite quickly, however, and if the German think tank Agora Energiewende is right, faster than expected.
The main obstacle to a more widespread adoption of photovoltaic so far, has been cost: solar used to be very expensive compared to coal or gas, but, according to Agora – that recently commissioned a study on the subject to the Fraunhofer Institute for Solar Energy Systems – this is no longer true.
Solar power – researchers say – thanks to technological advancements, is already cost-effective in some sunny regions: in Dubai, a long-term power purchase contract was signed recently for 5 cents per kilowatt hour. Projects under construction in Brazil, Uruguay and other countries are reported to produce at costs below 7 ct/KWh.
By comparison, electricity from new coal and gas-fired plants costs between 5 and 10 cents per kilowatt hour. And in Germany, right now, large solar plants deliver power for less than 9 cents, compared to as much as 11 cents from nuclear.
By 2025, the report says, the cost of producing power in central and southern Europe will have declined to between 4 and 6 cents per kilowatt hour, and by 2050 to as low as 2 to 4 cents, making it the cheapest source of energy in many parts of the world.
These forecasts seem to contradict several other studies which maintain that solar will give only a small contribution of solar power to future national, regional or global power systems, something that researchers believe can easily be explained by the use of outdated cost estimates for solar photovoltaics.
In the future, they think, the role of solar photovoltaics should instead be similar to that of wind onshore, which is similarly cheap but so far plays a much more prominent role in the scenarios.
The cost of power production is not the only factor to consider when making such estimates. If solar energy becomes mainstream or not, it will depend a lot on the financial incentives to the installation of solar panels made available by governments, and by the overall regulatory frameworks.
Inadequate regulatory regimes could increase cost of power by up to 50 percent through higher cost of finance and this might even overcompensate the effect of better local solar resources.
Even in the most conservative scenarios, and without considering the possibility of new technological breakthroughs, however, researchers believe that solar energy will become an option.
“Plans for future power supply systems should therefore be revised worldwide,” Dr. Patrick Graichen, Director of the Agora Energiewende, said in a statement, “Until now, most of them only anticipate a small share of solar power in the mix. In view of the extremely favourable costs, solar power will on the contrary play a prominent role, together with wind energy – also, and most importantly, as a cheap way of contributing to international climate protection.”
There’s a “political” (in the broad sense) connotation to this kind of reports, of course. Ever since Germany has announced its Energiewende (or “energy transition”), which includes the phasing out of all of its nuclear plants by 2022 and the reduction of greenhouse gas emissions by 80 to 95 percent no later than 2050, a number of articles and studies have appeared that seemed to show a dark side of this new course.
According to this school of thought, switching to renewables, in the short term, meant, in fact, burning more coal. Others debunked this as a myth.
Whatever the truth the future, if Fraunhofers’ scholars are right, is going to be green. Provided, of course, that there’s the political will to make it so.
