Two recent reports by the International Renewable Energy Agency (IRENA) show that the sky's the limit for solar and wind power.
First, there's "Letting in the Light: How Solar Photovoltaics Will Revolutionise the Electricity System," which finds that "the age of solar has arrived...faster than anyone predicted," and with people "only just beginning to recognise the consequences of the change." Key points in this report include:
- The "Plummeting Cost of Solar": "On a global level, weighted average levelised cost of electricity (LCOE) for utility-scale solar PV was USD 0.13/kWh in 2015. In comparison, electricity production from coal- and gas-fired power stations was in the range of USD 0.05-0.10/kWh. By 2025, the global weighted average LCOE of solar PV could fall by 59% with the right enabling policies (IRENA, 2016a). That would make solar the cheapest form of power generation in an increasing number of cases. Rooftop solar is more expensive than utilityscale PV, but this is balanced by grid savings."
- A "Dramatic Shift in Scale" is Taking Place: "IRENA estimates that solar PV capacity could reach between 1,760 and 2,500 gigawatts (GW) in 2030, producing between 8% and 13% of global power generation... Fulfilling the overall capacity potential of solar power means a seven- to eightfold increase, requiring average annual capacity additions to more than double, from 47 GW in 2015 to over 100 GW for the next 14 years."
- This Shift Represents a "Shock to the System": "With cost-competitive utility-scale solar PV power plants starting to replace fossil-fuel plants as the technology of choice, this existing paradigm is being challenged in a number of ways. Grid topology, market structure and power system operation all need adjustment. In the longer term, the spread of solar PV may even drive the relocation of economic activities to areas rich in solar resources."
- "New Financial and Business Models Flourishing": "As solar advances, new forms of financing and business models are replacing traditional models. For utility-scale projects, markets have witnessed the rise of project bundling, yieldcos and green bonds. Some of these instruments bring new risks...At the household level, we see the rise of new leasing models."
- "The Road Ahead": IRENA lays out a number of recommendations going forward, including updating policies "based on the latest technology insights and planning techniques;" encouragement by governments of "continued research, development and demonstration activities to continue the exploration of advanced solar PV options;" and "integration of solar PV into the electricity deserves special attention."
The other recent report by IRENA is called "The Power to Change: Solar and Wind Cost Reduction Potential to 2025." The bottom line is this:
While solar and wind power technologies are commercially available, they still have significant potential for cost reduction. Indeed, by 2025 the global weighted average levelised cost of electricity (LCOE) of solar photovoltaics (PV) could fall by as much as 59%, the LCOE of concentrating solar power (CSP) could fall by up to 43%. Onshore and offshore wind could see declines of 26% and 35%, respectively.
IRENA also notes, "Cost reductions will be driven by increasing economies of scale, more competitive supply chains and technology improvements that will raise capacity factors and/or reduce installed costs," all taking place "against a backdrop of increasing competitive pressures that will drive innovation."
Check out the chart below and you can see what IRENA's talking about: by 2025, just nine years from now, solar PV and wind cost just 6 cents per kilowatthour (kWh) and 5 cents per kWh, respectively, on a a "levelized cost" basis. Which means that we'll be seeing more of what's happening already -- solar and wind increasingly beating natural gas and coal-fired power on cost alone. And that's great news no matter how you look at it, as the sky's the limit for clean energy in the 2020s and beyond.