The cost of solar energy has fallen 90% in the past two decades and is expected to decrease by another 15% to 25% over the next decade, according to a recent report by Wood Mackenzie. By 2030, the company said solar will be the cheapest new source of power in every state, Canada, China, and 14 other countries.
Wood Mackenzie's report, Total Eclipse: How Falling Costs Ensure Solar Dominance in Power, describes the solar industry as “highly investable” as it is increasingly able to achieve both economic and political goals.
“As the world recovers from the economic slump caused by the COVID-19 pandemic while meeting the climate and environmental goals of the Paris Agreement, Solar stands ready to accelerate efforts for a low-carbon, sustainable future,” said Ravi Manghani, Research Director at Wood Mackenzie. “Solar is becoming so competitive that it is not only a means of decarbonization for corporate buyers, but also a way to reduce energy costs for their businesses.”
Solar is already the cheapest form of new power generation in 16 US states as well as in Spain, Italy and India. Even with the COVID-19 pandemic, global systems exceeded 115 gigawatts GW in 2020 compared to 1.5 GW in 2006. While solar energy growth on this scale has been driven in part by government subsidies and environmental targets, solar energy is now attractively priced alone.
Over the next ten years, Wood Mackenzie expects that further cost reductions will be caused by the growth and development of various technologies:
-Bifacial panels. Thanks to the new solar cell technology, both sides of a panel can generate electricity – up to 15% more
– Larger solar panels. This allows more of the surface of each panel to generate power, resulting in large increases in performance
-Tracker. Other solar systems include motorized systems that track the movement of the sun and change the orientation of the panels to improve energy sensing
Wood Mackenzie emphasizes that his prospects only took into account technological improvements that are well in the commercial development pipeline. The forecasts do not assume breakthroughs in next-generation solar technology or other innovations that could further improve the outlook.
Operating costs are also expected to decrease over the next ten years. Technologies that are already widespread in the wind power industry, such as the use of drones and thermal imaging for inspections, will make operations more efficient – as will the development of technologies such as artificial intelligence.
Battery storage is becoming a bigger part of the solar evolution equation as solar only generates electricity when the sun is shining. Peak electricity hours are still the same as solar hours in most markets. Both developers and utilities are preparing for possible changes in demand by including storage in their plans.