In some parts of the world, solar energy is now the cheapest source of electricity in history, thanks to policies that promote the growth of renewable energy. This is according to a new report published today by the International Energy Agency (IEA).
The sun is free, but the technology needed to convert it into usable electricity can be expensive. To encourage more people and companies to switch to solar energy, countries can adapt their policies to make the purchase of this equipment more affordable. Today, more than 130 countries have policies that reduce the cost of building new solar installations. This is the first year that the IEA has taken these policies into account when calculating solar costs in its annual World Energy Outlook report. After that, their estimates of solar energy costs fell by between 20 and 50 percent for the region compared to last year, Carbon Brief reported for the first time.
Solar is on track to become the “new king of electricity supply,” the report said, as prices continue to fall. It is expected to dominate the market more and more over the next decade, boosted by global efforts to tackle climate change. The EU, for example, has set itself the goal of securing 32 percent of its energy from renewable sources by 2030.
“Political support seems to be here to stay, which is a very good thing,” said Brent Wanner, who leads the modeling and analysis of electricity generation for the IEA’s World Energy Outlook. “These policy frameworks are indeed essential to support these low costs, which are then at the heart of the growth we need to move towards climate ambitions.”
In most countries around the world, it is consistently cheaper to build solar farms than new power plants running on coal or gas, the report said. For large-scale solar projects completed this year, the average lifetime cost of electricity production (called leveled electricity costs) is between $ 35 and $ 55 per megawatt-hour in some of the world’s largest markets – USA, Europe, China and India. Just four years ago, the average global equalized cost of solar energy was $ 100 per megawatt-hour, according to the World Economic Forum. About a decade ago, it was $ 300.
By comparison, the price of coal currently ranges between about $ 55 and $ 150 per megawatt-hour, according to a new IEA report – about the same as it has been for more than a decade. And the coal industry is in decline, despite US efforts by the Trump administration to support it. Globally, coal use is unlikely to return to pre-pandemic levels, even if the economy recovers next year, the IEA expects.
The forecast for solar energy in the future, on the other hand, is solar. Demand for electricity is now declining due to the pandemic, but the IEA expects that people’s appetite for electricity can recover quickly once the pandemic is contained and the economy recovers. It also envisions a future in which solar energy continues to grow at record speeds to meet growing consumer demands.
“The good news is that solar technology continues to improve, and innovation continues to reduce those costs,” says Wanner.