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Solar PV is now ‘Cheapest Electricity in History’, confirms IEA in significant update to its annual energy outlook

image credit: CarbonBrief.org | Workers clean photovoltaic panels inside a solar power plant in Gujarat, India. Credit: Reuters / Alamy Stock Photo.
James Tobin's picture
Business Strategy Lead JTI Consulting | GE

Accomplished Business Leader with a demonstrated history of Operational Strategy, Commercial, Product Marketing & Project Development experience in the Power, Clean Energy, Oil & Gas and...

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  • Dec 14, 2020
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The IEA (International Energy Agency) says SOLAR power is now the cheapest form of electricity to build in a significant update of its cost of energy position. It says this results from risk-reducing financial policies globally and applies to locations with both more favorable policies and easier access to financing. As emphasized on this post previously, effective Policy is all important to encouraging development of renewables & environmentally forward technologies.

Carbon Brief (CB) summarizes the extensive IEA World Energy Outlook 2020 with key details. Its main scenario has 43% more solar output by 2040 than it expected in 2018 partly due to detailed analysis showing solar power is 20%~50% cheaper than thought.”! Calculations depend on financing figures compared with the amount of output for solar projects, meaning that as solar panel technology gets more efficient & solar panel prices continue to fall, investors are getting much better financing deals. Solar's 'cheapness' is based on companies building solar projects. It is a Big Deal, because power plant CAPEX has been a key factor for coal & gas power being so dominant.

Emerging Reality Fact > with its new, Lower Cost of Capital, Solar Power's Cost per Megawatt has fallen almost completely Below both Gas and Coal in most key jurisdictions worldwide.

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Matt Chester's picture
Matt Chester on Dec 14, 2020

IEA said so for global solar power, and Lazard recently said a similar thing for U.S.-specific energy. Eager to see what these figures look like in 5 years, too!

Joshua Aldridge's picture
Joshua Aldridge on Dec 14, 2020

I can see this being the case, as such, I believe we will continue to see solar installations popping up more and more in both residential and commercial settings, and mostly behind-the-meter. This is a prime opportunity for anyone in the business of aggregation to build up a "hefty" generation profile in areas where solar is reasonably reliable. 

Jim Stack's picture
Jim Stack on Dec 14, 2020

This is very true. When you also add up all the subsidies fossil fuels and Nuclear get it is even better. Then add in the reduced pollution and water saving and you find it has been lower cost since 2004.  We also use most of our electricity during the Peak Solar hours. With the fast growing Battery Storage it's a perfect combination. 

  With the proper policy we can run everything on Renewable Energy. Wind is also low cost and hydro has been around a long time producing low cost baseload power. The future looks clear and Sunny to me. 

Rao Konidena's picture
Rao Konidena on Dec 14, 2020

Solar is cheapest, yet, incumbent utilities are throwing barriers in the form of a cap on the net metering. We need to remove that cap to let all sectors take advantage of this cheap resource - residential, commercial, industrial and utility scale.

Matt Chester's picture
Matt Chester on Dec 14, 2020

The market mechanisms and incentives in play in energy and utilities are unlike any other industry out there-- so it's important to recognize that and have the right regulations and policies in place, as it is in the end the customer who should be able to get reliable, affordable energy and it should be all of us that are supporting that energy increasingly coming from clean means

Ross Holden's picture
Ross Holden on Dec 15, 2020

"Cheapest electricity in history" seems to contradict the IEA's recently-released "Projected Costs of Generating Electricity 2020" which states "Electricity produced from nuclear long-term operation (LTO) by lifetime extension is highly competitive and remains not only the least cost option for low-carbon generation - when compared to building new power plants - but for all power generation across the board." But I won't be checking the other source because, (in)conveniently, it costs 120 euros to download. 

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