The 7th edition of DNV's annual Energy Transition Outlook expects solar to become the most cost-effective electricity source globally by 2050 when its levelized cost of electricity (LCOE) will average around $21/MWh. Its present level averages at $41/MWh. In some cases, DNV expects it to drop further below $20/MWh.
Unit investment costs are likely to drop down to $560/kW by mid-century which will be a major catalyst for LCOE decline, from landing below $700/kW after 2030. In comparison, the learning rate of solar will drop from 26% now to around 17% by 2050 as cost components adjust to decreasing expenses.
"Despite this easement in the rate of cost reduction, solar PV is poised to be the unrivalled contender for the cheapest new electricity source globally, with exceptions only in areas with less conducive irradiation conditions like the higher northern latitudes," reads the report.
Advanced data monitoring and efficient maintenance practices will ensure the learning rate for operational expenses (OpEx) will remain steady at 9% till 2050.
In terms of installed capacity, DNV analysts peg the annual PV additions to grow to about 500 GW by 2040, doubling from 250 GW in 2022. Solar coupled with storage projects will comprise 10% of all new PV facilities within a decade, swelling to 62% by 2050.
By then, global solar PV capacity will grow to 8.8 TW and an additional 6.5 TW for solar+storage. The total of 15.3 TW will be a 13-fold growth from 2022.
DNV sees Greater China and North America leading the solar energy world in 2050 even as other regions like the Indian subcontinent and the MENA regions grow their share of solar among other regions.
The report writers also look at off-grid solar around the globe. By 2050, close to 3 TW of this capacity will cater to hydrogen production, especially in Greater China, Europe and North America. About 137 GW off-grid solar capacity will be sited in remote regions of Sub-Saharan Africa and the Indian subcontinent.
Despite this strong growth of solar PV technology, it will account for only 39% of the global on-grid electricity generation by mid-century. DNV explains, "The efficiency or the capacity factors of solar power stations trail behind other renewable energy sources like wind and hydropower. Nevertheless, the underlying cause of solar's rapid proliferation lies in its dwindling costs."
The complete report is available for free download on DNV's website.
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