The Abu Dhabi-based International Renewable Energy Agency (Irena) says the amount of electricity generated using solar panels stands to expand as much as sixfold by 2030 as the cost of production falls below competing natural gas and coal-fired plants.
The forecast came after the record for the world’s cheapest solar tariff was set in the UAE last month in an auction. It was a consortium including Abu Dhabi’s Masdar and Saudi Arabia’s Abdul Latif Jameel that bid 2.99 cents per kilowatt-hour, 15 per cent cheaper than the previous record.
Solar plants using photovoltaic technology could account for 8 per cent to 13 per cent of global electricity produced in 2030, compared with 1.2 percent at the end of last year, Irena said in a report on Wednesday. The average cost of electricity from a photovoltaic system is forecast to plunge as much as 59 per cent by 2025, making solar the cheapest form of power generation “in an increasing number of cases”, it said.
Renewables are replacing nuclear energy and curbing electricity production from gas and coal in developed areas such as Europe and the United States, according to Bloomberg New Energy Finance. California’s PG&E is proposing to close two nuclear reactors as wind and solar costs decline. Even as supply gluts depress coal and gas prices, solar and wind technologies will be the cheapest ways to produce electricity in most parts of the world in the 2030s, New Energy Finance said in a report this month.
“The renewable energy transition is well underway, with solar playing a key role,” said the Irena director general Adnan Amin. “Cost reductions, in combination with other enabling factors, can create a dramatic expansion of solar power globally.”
Bloomberg New Energy Finance also forecasts growth in solar photovoltaics, reaching 15 per cent of total electricity output by 2040, according to Jenny Chase, the head of solar analysis in Zurich. “Irena’s assumptions are reasonable,” she said. “Solar just gets so cheap under any reasonable scenario.”
The “most attractive” markets for solar panels up to 2020 are Brazil, Chile, Israel, Jordan, Mexico, the Philippines, Russia, South Africa, Saudi Arabia and Turkey, according to Irena. Global capacity could reach 1,760gigawatts to 2,500GW in 2030, compared with 227GW at the end of 2015, it said.
Smart grids, or power networks capable of handling and distributing electricity from different sources, and new types of storage technologies will encourage further use of solar power, Irena said.
As of 2015, the average cost of electricity from a utility-scale solar photovoltaic system was 13 US cents per kilowatt hour. That is more than coal and gas-fired plants that averaged 5 cents to 10 cents per kilowatt hour, according to Irena. The average cost of building a solar-powered electricity utility could fall to 79 cents per watt in 2025 from $1.80 per watt last year, it said. Coal-fired power generation costs are about $3 per watt while gas plants cost $1 to $1.30 per watt, according to Irena.
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