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Solar Could Beat Coal to Become the Cheapest Power on Earth

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Solar power is now cheaper than coal in some parts of the world. In less than a decade, it’s likely to be the lowest-cost option almost everywhere.

In 2016, countries from Chile to the United Arab Emirates broke records with deals to generate electricity from sunshine for less than 3 cents a kilowatt-hour, half the average global cost of coal power. Now, Saudi Arabia, Jordan and Mexico are planning auctions and tenders for this year, aiming to drop prices even further. Taking advantage: Companies such as Italy’s Enel SpA and Dublin’s Mainstream Renewable Power, who gained experienced in Europe and now seek new markets abroad as subsidies dry up at home.

Since 2009, solar prices are down 62 percent, with every part of the supply chain trimming costs. That’s help cut risk premiums on bank loans, and pushed manufacturing capacity to record levels. By 2025, solar may be cheaper than using coal on average globally, according to Bloomberg New Energy Finance.

“These are game-changing numbers, and it’s becoming normal in more and more markets,” said Adnan Amin, International Renewable Energy Agency ’s director general, an Abu Dhabi-based intergovernmental group. “Every time you double capacity, you reduce the price by 20 percent.”

Better technology has been key in boosting the industry, from the use of diamond-wire saws that more efficiently cut wafers to better cells that provide more spark from the same amount of sun. It’s also driven by economies of scale and manufacturing experience since the solar boom started more than a decade ago, giving the industry an increasing edge in the competition with fossil fuels.

The average 1 megawatt-plus ground mounted solar system will cost 73 cents a watt by 2025 compared with $1.14 now, a 36 percent drop, said Jenny Chase, head of solar analysis for New Energy Finance.

That’s in step with other forecasts.

  • GTM Research expects some parts of the U.S. Southwest approaching $1 a watt today, and may drop as low as 75 cents in 2021, according to its analyst MJ Shiao.
  • The U.S. Energy Department’s National Renewable Energy Lab expects costs of about $1.20 a watt now declining to $1 by 2020. By 2030, current technology will squeeze out most potential savings, said Donald Chung, a senior project leader.
  • The International Energy Agency expects utility-scale generation costs to fall by another 25 percent on average in the next five years.
  • The International Renewable Energy Agency anticipates a further drop of 43 percent to 65 percent for solar costs by 2025. That would bring to 84 percent the cumulative decline since 2009.

The solar supply chain is experiencing “a Wal-Mart effect” from higher volumes and lower margins, according to Sami Khoreibi, founder and chief executive officer of Enviromena Power Systems, an Abu Dhabi-based developer.

The speed at which the price of solar will drop below coal varies in each country. Places that import coal or tax polluters with a carbon price, such as Europe and Brazil, will see a crossover in the 2020s, if not before. Countries with large domestic coal reserves such as India and China will probably take longer.

Coal’s Rebuttal

Coal industry officials point out that cost comparisons involving renewables don’t take into account the need to maintain backup supplies that can work when the sun doesn’t shine or wind doesn’t blow. When those other expenses are included, coal looks more economical, even around 2035, said Benjamin Sporton, chief executive officer of the World Coal Association.

“All advanced economies demand full-time electricity,” Sporton said. “Wind and solar can only generate part-time, intermittent electricity. While some renewable technologies have achieved significant cost reductions in recent years, it’s important to look at total system costs.”

Even so, solar’s plunge in price is starting to make the technology a plausible competitor.

Sunbelt countries are leading the way in cutting costs, though there’s more to it than just the weather. The use of auctions to award power-purchase contracts is forcing energy companies to compete with each other to lower costs.

An August auction in Chile yielded a contract for 2.91 cents a kilowatt-hour. In September, a United Arab Emirates auction grabbed headlines with a bid of 2.42 cents a kilowatt-hour. Developers have been emboldened to submit lower bids by expectations that the cost of the technology will continue to fall.

“We’re seeing a new reality where solar is the lowest-cost source of energy, and I don’t see an end in sight in terms of the decline in costs,” said Enviromena’s Khoreibi.

 

Bloomberg



128 Comments on "Solar Could Beat Coal to Become the Cheapest Power on Earth"

  1. GregT on Fri, 6th Jan 2017 12:32 pm 

    “Stand-alone renewable energy and storage methods are next”

    And they will not last as long as the energy source that has allowed us to manufacture them to begin with.

  2. GregT on Fri, 6th Jan 2017 12:39 pm 

    “Or to avoid knit-picking over the meaning of “renewable”…”

    Or the meaning of the word ‘realism’.

    Never let reality get in the way of a good techno-optimistic story.

  3. GregT on Fri, 6th Jan 2017 12:43 pm 

    “just electricity from the wall outlet.”

    Assuming one ignores where that electricity actually comes from.

  4. Cloggie on Fri, 6th Jan 2017 12:49 pm 

    Assuming one ignores where that electricity actually comes from.

    From solar panels or wind turbines.

    And they will not last as long as the energy source that has allowed us to manufacture them to begin with.

    Once you have a sufficient number of solar panels installed, you can use the energy generated from these panels to build new solar panels.

    What part of this very simple consideration don’t you understand?

  5. Cloggie on Fri, 6th Jan 2017 12:50 pm 

    All the steps in the production process of solar panels shown here:

    https://www.youtube.com/watch?v=BKrOZ6OogmQ

    No fossil fuel necessary. Just electricity. That can come from solar panels of wind turbines.

  6. Cloggie on Fri, 6th Jan 2017 12:58 pm 

    Greg, could you please point me to a study made by qualified people (not the Richard Heinberg’s of this world) who claim that renewable energy can’t exist in the long term without fossil fuel?

    It would mean that hundreds of thousands of engineers and technicians around the world are working for naught.

    Here’s the kicker: they don’t.

  7. Simon on Fri, 6th Jan 2017 1:06 pm 

    First off, I am Very tired so forgive me if this appears a testy response

    Antius you said

    Renewable Electricity is Intermittent and uncontrollable power is far less valuable

    To whom ?
    In a power auction you are paid the same regardless of the source of the power ?
    The only possible reason for assigning different powers to renewables over thermal is if the renewables cannot produce in a peak period, or cannot produce when the market is tight (supply is getting to close to capacity for comfort)
    Renewable power can be constrained down, just not up, so calling it uncontrollable is a bit glib ?

    unless you are assigning some totally subjective view of ‘Value’ in which case, it being subjective, has no real value to anyone but yourself.

    Rockman I tried that link, but it would not let me in, I suspect it knows I am a dodgy foreigner. However ercot sounds like an integrated Transmission operator. I suspect that the us system may break out into several of these regions connected by honking great cables (interconnectors) which you can trade through (coincidentally once the interconnector is in place you can also hedge through this)

    You are making me defend techno optimists …. curse you 🙂

    Simon

  8. Davy on Fri, 6th Jan 2017 1:44 pm 

    Clog, are there studies for trips to Mars? There are I am sure. It is theoretically possible I am sure at least eventually when some hurdles are overcome. Will we ever get to Mars is an open ended question similar to a 100% renewable world. I seriously doubt Mars travel will ever happen but it could. There is lots of talk about this very different world built completely around renewables but little reality of it. This is not a situation because the technology is not able. It is a multi-dimensional situation that involves many issues concerning society’s future that involve more than technology. A renewable world is theoretically possible but the scale of change is enormous. I don’t see it happening as many see it with our world now only renewable adapted. It may be possible with nodes of globalism that survive a collapse of globalism. It is yet to be proven if a fossil fuel world will survive much longer. Economic collapse and or war may end either energy future.

  9. GregT on Fri, 6th Jan 2017 2:19 pm 

    Man made energy production is at the root of mankind’s greatest predicaments Cloggie, not the solution to them.

    From a previous article:

    “If you believe that technology will fix our predicament, you could do the service of making conversation easier by admitting that you’re a “T.” A “T” is a believer in the thought that technology will somehow help us out of the collapse … caused by our reliance on technology.”

    I would argue that our biggest hurdles are population growth, and environmental degradation. Both a direct result of man made energy production.

    Even if it were possible to temporarily “fix” our energy predicament, it would do nothing more than exacerbate those far more pressing problems.

    “It would mean that hundreds of thousands of engineers and technicians around the world are working for naught.”

    Correct. The road to hell is being paved with good intentions. And if you honestly believe that electricity is going to solve the problems arising in the Eurozone, for example, you are in for a rather rude awakening.

  10. onlooker on Fri, 6th Jan 2017 2:43 pm 

    Cloggie, what Greg says is spot on. We have a predicament that cannot be solved. We have too large a population with too many demands on Earth and technology at this point is only making it worse because of our penchant for superfluous consumerism.

  11. Cloggie on Fri, 6th Jan 2017 2:59 pm 

    @Davy, if men can go to the moon, they can go to Mars. Not that this should be very high on our agenda, but it can be done. But currently we have more pressing issues, to put it mildly.

    A renewable world is theoretically possible but the scale of change is enormous.

    No discussion about that.

    Man made energy production is at the root of mankind’s greatest predicaments Cloggie, not the solution to them.

    Fossil-based energy has enabled the world as we know it, including population growth. There is no discussion that we are running into massive problems. This was recognized in 1973 with the Club of Rome, which had an impact on me at the time and its conclusions still seem to be valid. Although it must also be recognized that that report did induce a lot of (mental) change, most of all in Europe. The idea that we must change course is absolutely a majority position in Europe.

    A “T” is a believer in the thought that technology will somehow help us out of the collapse

    I am not a “T” in a general sense. I am only a “T” in the sense that it is a good idea to get rid of fossil and replace it with solar/wind/etc. I am also a “T” in that I know that a renewable energy base can exist without fossil support in the long term. And that we determinedly should move away from fossil, exactly as is the political agenda in Europe.

    I would argue that our biggest hurdles are population growth, and environmental degradation. Both a direct result of man made energy production.

    Fully agree, if you refer to fossil-based energy production.

    Correct. The road to hell is being paved with good intentions. And if you honestly believe that electricity is going to solve the problems arising in the Eurozone, for example, you are in for a rather rude awakening.

    I certainly believe in the possibility of collapse, in the EU and the US. That collapse will probably be financial and due to increased ethnic tensions, culminating in open conflict.

    But that doesn’t change the objective that we should move away from fossil into renewables as fast as we can. There are no physical constraints that hinder that transition.

    Europe is the scientific and technological center of the universe (although North-Americans are excused to challenge that notion). The EU has access to the best scientists. Nobody seriously says that the EU efforts in moving away from fossil into renewables are futile. It can be done.

  12. Sissyfuss on Fri, 6th Jan 2017 3:00 pm 

    Greg, you left out resource depletion, part of the unholy trinity.

  13. Boat on Fri, 6th Jan 2017 4:29 pm 

    Cloggie,

    Why is Eastern Europe putting in so many coal plants. Is the sun and wind just that weak? Putins nat gas will be used as a geopolitical weapon but coal?

  14. Davy on Fri, 6th Jan 2017 5:06 pm 

    Clog, you should be more modest with your forecast. It may be likely some regions or nations transition significantly to renewables. That is a big if but may happen with the right circumstances. Much of the world is too poor for them. They can barely afford fossil fuels and food now.

  15. rockman on Fri, 6th Jan 2017 6:22 pm 

    Antius – “The best the solar plant can do is reduce the amount of fuel that the station burns”. And that’s a bad thing? Consider Texas is getting 10% from the alts. We’re the largest electricity consuming state…about 10% of the country’s total. That 10% we get from the alts is more electricity then each of 19 states get FROM ALL SOURCES.

    And the reason Texas has a world class alt energy system is because we kept the coal/NG burning infrastructure is place. Coal/NG fired capacity that hasn’t been reduced 1 Btu. If we had not gone with alt energy we would have built the same capacity with fossil fuel source. New fossil fuel sources that would have added the equivalent of the total electricity produced by 19 states.

  16. Cloggie on Sat, 7th Jan 2017 6:13 am 

    Why is Eastern Europe putting in so many coal plants. Is the sun and wind just that weak? Putins nat gas will be used as a geopolitical weapon but coal?

    Indeed, for starters wind on land is not as intense as at sea. Furthermore they don’t have a renewable energy industry of their own. For them it is cheaper to use existing infrastructure and cheap domestic coal, mined by their own people.

    In the case of Germany it is different. After Fukushima, Merkel radically closed down all nuclear power stations by a stroke of a pen. Germany is apparently not ready to replace that nuclear capacity with 100% renewable just now.

  17. Davy on Sat, 7th Jan 2017 7:08 am 

    Here you go clog, the Italians are helping my backward state with wind power.

    “ENEL STARTS CONSTRUCTION OF NEW 300 MW WIND PROJECT IN THE UNITED STATES”
    http://tinyurl.com/h5294r7

    “The facility is owned by EGPNA subsidiary Rock Creek Wind Project, LLC and is located in Atchison County, Missouri. Once fully operational, Rock Creek is expected to generate approximately 1,250 GWh annually – equivalent to the energy consumption needs of more than 100,000 U.S. households – while avoiding the emission of about 900,000 tonnes of CO2 each year.”

    “The new wind farm will have a total installed capacity of 300 MW and is expected to enter into service by the end of 2017. Enel will be investing approximately 500 million US dollars in the construction of Rock Creek as part of the investment outlined in its current strategic plan. The project is being financed through the Enel Group’s own resources.”

  18. Cloggie on Sat, 7th Jan 2017 7:37 am 

    Time to celebrate the Italian way!!!

    https://www.youtube.com/watch?v=JozAmXo2bDE

  19. Cloggie on Sat, 7th Jan 2017 8:37 am 

    1,250 GWh annually

    That’s 1,250,000,000 kWh

    Just to get an idea of what 1 kWh actually is:

    http://tinyurl.com/jt9ncxb

    That’s 1 Davy working all day long very hard on his farm. It’s like 10 hours sitting on a home trainer in your local gym producing 100 Watt. Which is easy to do for 30 minutes but not for 10 hours.

    Missouri has a population of 6 million.

    Once these 300 MW wind turbines are installed, Missouri gets 1,250,000,000 worth of virtual energy slave man-days per year extra. Assume a year to have 200 working days. That means that Missouri will get an extra 6.25 million man-year / year.

    In other words every Missourian gets permanently an Italian in his kitchen for the coming 30 years, willing to sit on an imaginary home-trainer, generating constantly 100 Watt around the clock, which is enough to power your iPad (10 Watt), 2 LED-lights of 10 Watt each, a router of 30 Watt and an energy efficient fridge of 50 Watt.

    And remember folks: renewable energy is a “techie dream”.

    [snicker]

  20. Kenz300 on Sat, 7th Jan 2017 10:36 am 

    Wind and solar are a better options than using fossil fuels.

    Climate Change is real. It will be the defining issue of our lives.

    Renewables Provide Majority of New US Generating Capacity through November 2016

    http://www.renewableenergyworld.com/articles/2017/01/renewables-provide-majority-of-new-us-generating-capacity-through-november-2016.html

    Germans Get Almost One-Third of Electricity from Renewables in 2016

    http://www.renewableenergyworld.com/articles/2017/01/germans-get-almost-one-third-of-electricity-from-renewables-in-2016.html

  21. Kenz300 on Sat, 7th Jan 2017 10:40 am 

    Wind And Solar Now Cheapest Unsubsidized Electricity Sources In The U.S.

    http://seekingalpha.com/article/4031497-wind-solar-now-cheapest-unsubsidized-electricity-sources-u-s

    World Energy Hits a Turning Point: Solar That’s Cheaper Than Wind

    https://www.bloomberg.com/news/articles/2016-12-15/world-energy-hits-a-turning-point-solar-that-s-cheaper-than-wind

    Solar cheaper than natural gas and coal.

    Solar panels now have lower cost and are projected to last 3 times longer than just a few years ago. Game Changer.

    Climate Change will be the defining issue of our lives.

    Cheaper Wins !

  22. Antius on Mon, 9th Jan 2017 6:21 am 

    ‘Up to a renewable share of the total energy mix of 40%, you don’t need storage.’

    That’s true if all of your renewable energy comes from biomass, which you can store relatively easily, or hydropower on a river with only modest seasonal fluctuation in flow rate. But it isn’t at all true for intermittent renewables like solar and wind, the very sources that present the greatest abundance of renewable energy and the ones that I think you are talking about. How do you propose a solar panel will power anything at night without some form of backup and storage? How about a cloudy day, where output can drop by up to 80%? The same is true of wind power, where a depression can cause low wind speeds for weeks at time over Western Europe. For these sources, you must either store energy to cover anticipated lull periods or use back-up generators to make up the difference.

    ‘Additionally the larger the geographical areas are that are interconnected into a single grid, the less storage you need (statistical effects kicking in).’

    Over truly trans-continental distances that may be true, ultimately, multiple solar power plants positioned across the globe connected by a global network of superconducting cables might need little or no back-up or storage. That’s if your region is global and intermittency is predictable. You are really trading one cost for another – you are reducing back-up cost by pushing up transmission costs.
    For what you’re saying to be true at all, the region must span at least two weather systems. And it ignores geopolitical concerns and assumes that long distance transmission is relatively cheap with little in the way of losses. This certainly isn’t true at present. And we do not live in a one-world utopia where energy security is not an issue. There is plenty of correlation between wind speeds in France say, and wind speeds in central Europe and a lot of correlation between mainland Europe and the UK. If it’s dark in Germany, it won’t be much longer before the sun sets in the UK. Cloud can very often blanket large parts of Europe. The need for back-up and storage will always have a risk management aspect to it, based upon a pre-determined tolerable failure frequency for power supply. For manufacturing industries the reliability of power supply is important. Unplanned power failure can often have disproportionately damaging consequences. If these people have doubts about the reliability of your power supply, they will be buying diesel generators at greater expense to themselves.

    ‘What’s so expensive about upgrading an existing hydro-power station with a pump? You can reuse everything else: pipe, dam, lake. The only requirement is that you have a dam and reservoir down stream to pump water from. To even out short term fluctuations it suffices to have a small reservoir.’

    No one is saying that hydroelectric power plants cannot be used to store some excess energy. But the potential is limited globally. And many hydro plants do not have the potential head of the plant that you referenced. The storage capability is limited and will not stretch to covering the sort of power surges that can be expected due to heavy reliance on intermittent energy sources.
    You come across as an enthusiast or political activist. I suspect that you are preordained towards using intermittent renewable energy because you like the idea of it in an idealistic way. The problem with having that sort of emotional bias towards a certain technique or technology is that one tends to bend facts to fit theories, rather than theories to fit facts. We are all guilty of it from time to time. But in this case there are real consequences – if we do not pull our heads of the clouds and invest in practical generating capacity, our children won’t eat.

  23. Antius on Mon, 9th Jan 2017 6:29 am 

    ‘Why is Eastern Europe putting in so many coal plants. Is the sun and wind just that weak? Putins nat gas will be used as a geopolitical weapon but coal?

    Indeed, for starters wind on land is not as intense as at sea. Furthermore they don’t have a renewable energy industry of their own. For them it is cheaper to use existing infrastructure and cheap domestic coal, mined by their own people.

    In the case of Germany it is different. After Fukushima, Merkel radically closed down all nuclear power stations by a stroke of a pen. Germany is apparently not ready to replace that nuclear capacity with 100% renewable just now.’

    Nor capable. I recommend you read ‘Without Hot Air’ by David McKay. Energy consumption goes far beyond electricity. To power a modern economy using renewable energy requires country-sized infrastructure. Much of that power would need to be solar for Germany and the land requirements would put a serious dent in the country’s agriculture. Not sure how they would generate excess power in winter?

  24. Cloggie on Mon, 9th Jan 2017 6:45 am 

    That’s true if all of your renewable energy comes from biomass, which you can store relatively easily, or hydropower on a river with only modest seasonal fluctuation in flow rate.

    Antius, this is really the wrong site for you to propose you nuclear views.

    Earlier I posted an Australian study that claims that you don’t need storage below a 40% renewable share in your total electricity mix.

    There we go again:

    https://cleantechnica.com/2016/12/09/much-energy-storage-needed-solar-wind-powered-grid/

    Independent German confirmation:

    http://reneweconomy.com.au/40-renewables-wouldnt-need-much-coal-storage-study-25418/

    Here is an official study for California:

    http://www.engineering.com/ElectronicsDesign/ElectronicsDesignArticles/ArticleID/8272/Is-Storage-Necessary-for-Renewable-Energy.aspx

    Conclusion: shall we first implement this 40% renewable share of our energy mix first, before we begin to worry about storage?

    Thanks.

  25. Cloggie on Mon, 9th Jan 2017 6:53 am 

    Indeed, for starters wind on land is not as intense as at sea. Furthermore they don’t have a renewable energy industry of their own.

    They have an awful lot of biofuel. Eastern Europe is rather upbeat about renewable energy.

    http://blogs.lse.ac.uk/lsee/2015/03/26/south-east-europe-has-the-ingredients-to-become-the-energy-generation-and-storage-powerhouse-of-europe/

    For starters their populations density is not very high, in contrast to NW-Europe, a distinct advantage. Furthermore, they don’t use much electricity in the first place.

    Average power consumption per capita (Watt):

    Germany……1160
    Netherlands…856
    Britain…….822
    Poland……..591
    Croatia…….502
    Bulgaria……438
    Romania…….315

  26. Antius on Mon, 9th Jan 2017 7:12 am 

    You can either have storage or back-up, or some combination of the two. You don’t need storage if you have plenty of coal and gas plants providing back-up and renewable penetration is limited. That appears to be what your study alludes to without really saying so, and it is obvious.

    But it doesn’t come for free. Those back-up power plants are sitting there costing money, even if they aren’t generating. Some of them will need to burn fuel on hot-standby. You essentially have a fossil fuel powered energy system, with some renewable generation thrown in to reduce fuel consumption. You effectively have to pay the capital and operating costs of two sets of power plants, which pushes up costs a lot overall, but you will save fuel and reduce CO2 emissions.

    I am not pro or anti anything. If I thought intermittent renewable energy could do the job of providing the power that the world needs for high living standards at an affordable cost, I would advocate it. I do not doubt that such a system could be made to work with enough money and R&D thrown in. The cost of energy is not a trivial matter. Our living standards are basically proportional to energy availability and the more it costs the less we have. People’s lives will be embellished by cheaper energy or ruined by its absence. I tend to come down in favour of nuclear power for that very reason. It is a reasoned opinion, not an ideological one.

    I don’t like to see inconvenient details whitewashed over to support a political bias towards one option or the other. Ideology should never come into discussions like this. It can only obscure the truth and adds nothing.

  27. Davy on Mon, 9th Jan 2017 7:23 am 

    Clog, that is a realistic goal and likely achievable if we are lucky to avoid an economic depression and or wars. That is the unfortunate “big if”. You Europeans will struggle to achieve that goal in the wrong situation. You techno optimist biggest issues is treating the economy as a constant. It takes money, organization, and stability to allow the type of growth you are calling for. I am not saying it won’t happen just trying to temper your enthusiasm. You place too much emphasis only on technology is another issue. Attitudes and lifestyle will have to change. Social and political arrangements will have to adapt. Technology is the easy part.

  28. Davy on Mon, 9th Jan 2017 7:49 am 

    Bingo Antius except with your support for NUK. Let’s say we should try to extend the NUK we have as long as we can and try to manage the waste immediately. That in itself is a tall order for a society overwhelmed with problems and increasing broke financially. NUK has little future because of all the costs physical, abstract, and hidden. You are dead on point with renewables and all their hidden costs techno optimist like clog dismiss and discount.

    I think a far better course of action is embracing anything and everything we have in a relative arrangement of cost benefit. A transition to all one or the other is unlikely because of economics and physical scale. We already have built out assets that should be maintained and enhanced. We need more wind and solar especially where there are economic and physical sweet spots. A complete alternative energy world is unrealistic at least now. Maybe someday it could be a goal but now we should be concentrating on what we have and what works. NUK and fossil fuels must be maintained. We need to make incremental steps which will have to include what we have. This will have to include mistakes and we will have to maintain what we have.

    The biggest problem we have is attitudes and lifestyles. People have unrealistic expectations that will not be met. We can’t take care of everything like everyone wants. There must be a focus. Our techno optimist want far too many grandiose technologies to happen instead of working with the proven and less glamorous. We are running out of time and resources it is imperative we start getting modest and realistic. We can’t have everything. This all reminds me of the US military that is trying to buy every military platform it can because of capability and in the process undermining its capability. We have much to work with but we can’t have it all. We are in the zone of tradeoffs. Cost benefit analysis with some kind of relative sacrifice is warranted before it is forced on us.

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