By 2030, solar will become the cheapest source of new power in markets that include the US, Canada and China, according to a study by Wood Mackenzie.
The cost of solar power has dropped 90% over the last two decades and will likely fall another 15% to 25% in the decade to come, said the analyst outfit.
Wood Mackenzie’s report Total eclipse: How falling costs will secure solar’s dominance in power calls the solar power industry “highly investible” due to its growing ability to meet both economic and policy goals.
Wood Mackenzie research director Ravi Manghani said: “As the world strives to recover from the economic slump caused by the Covid-19 pandemic and simultaneously meet the climate and environmental goals of the Paris Agreement, solar is uniquely placed to advance efforts towards a low-carbon, sustainable future.”
Solar is already the cheapest form of new electricity generation in 16 US states, plus Spain, Italy and India.
During 2020, amid the pandemic, global installations exceeded 115GW, compared to 1.5GW in 2006, said Wood Mackenzie.
While the growth of solar to this scale was driven partially by government subsidies and environmental goals, solar generation is now attractive based on price alone.
“Solar is becoming so competitive that not only is it a means of decarbonisation for corporate buyers, but also a way to lower the cost of energy for their businesses,” Manghani added.
In the next decade, Wood Mackenzie expects more cost reduction to be driven by growth and development in several technologies.
These include bifacial panels, where both sides of the module produce power, larger panels with increased surface area to boost output, as well as trackers to follow the sun’s movement.
The projections do not assume any breakthroughs in next-generation solar technology or other innovations, which could provide further upside to the outlook, Wood Mackenzie said.
Operating costs are expected to drop as well over the next decade.
Technologies that are already widely in use by the wind power industry, such as using drones and thermal imaging for inspections, will make operations more efficient, as will developing technologies such as artificial intelligence, Wood Mackenzie found.
With solar becoming the lowest cost source of new power generation supplies and more competitive than other technologies, the Wood Mackenzie stated the only “limiting factors” will be investor willingness to take on market price risk, electric transmission capacity, and the development of battery technologies.
While peak-price hours for electricity still coincide with solar generation hours in most markets, both developers and utilities are preparing for potential changes in demand by including storage in their plans, the analyst outfit found.