- Wood Mackenzie expects solar power to become cheapest form of new electricity generation in every state of the US, in Canada, China and 14 other nations
- It expects 15% to 25% drop in costs over the decade making it highly investible power generation technology, not really aided by government subsidies and environment goals
- By 2030, more than 4 TW of wind and solar power is likely to come online with solar contributing around 2.6 TW
- As solar costs decline, it may also bring down wholesale prices, which may pull down its overall profitability, according to Wood Mackenzie analysts
Come 2030 and solar will become the cheapest source of new power in every US state, Canada, China and 14 other nations, claims market intelligence firm Wood Mackenzie in its latest report titled Total eclipse: How falling costs will secure solar’s dominance in power.
Solar power is already the cheapest form of new electricity generation in 16 US states, Spain, Italy and India. But by 2030, the report writers expect more than 4 TW of wind and solar power to come online globally increasing the global share of renewables in the world’s energy generation capacity to 30% from 10% currently. Solar’s share will be around 2.6 TW.
Analysts believe that between now and 2030, the cost of solar power is likely to drop another 15% to 25%, after having dropped 90% over the last 2 decades. It is a ‘highly investible’ power generation source and to give it credit, currently solar power is the most attractive form of electricity on price basis alone. Hitherto, its success was partially due to government subsidies and need to meet environmental goals.
And from now on, more cost reduction will be driven by growth and development of bifacial solar panels, larger solar modules and trackers—all to ensure increase in energy capture. Wood Mackenzie analysts explain that their outlook is solely based on technological improvements already well into the commercial development pipeline and does not factor in any ‘breakthroughs’ in next generation solar technologies which could further increase the estimates.
At the same time, operating costs are likely to decline too over the next decade. All in, solar power offers the ability to meet both economic and policy goals.
However, there is a word of caution for solar energy investors from Wood Mackenzie’s Research Director Ravi Manghani as he points out that as solar PV technology becomes more successful cost wise and gains larger market share, it could also bring down wholesale prices thereby pulling down its overall profitability.
“Now, with solar becoming the lowest cost source of new power generation supplies and more competitive than other technologies, the limiting factors will be investor willingness to take on market price risk, electric transmission capacity, and the development of battery technologies,” said Manghani.
According to Wood Mackenzie, the world installed over 115 GW solar PV capacity in 2020, compared to Bloomberg New Energy Finance’s (BloombergNEF) 132 GW estimate for the past year. For 2021, the latter has high hopes and expects between 151 GW to 194 GW to be installed (see BNEF: 132 GW Solar Installed Globally In 2020).
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