Why the price of new solar energy has fallen by an astonishing 89% in the last ten years

In 1956, an early demonstration of solar photovoltaic produced 1 watt of energy at a moderate price of $1,865 adjusted for inflation. In other words, you need to spend more than half a million dollars to be equivalent to a modern 320-watt rooftop solar panel. Of course, in addition to the price, you also need to find space for a ship of solar cells since 1956 to make it equal to the output of a single independent modern panel.
In the latest article on the declining cost of renewable energy, Max Roser of “World in Data” writes that from the beginning, solar energy was meaningless to anyone anywhere on the planet.
Fortunately, there is a sunny place here, the grid is inaccessible, the price is no problem, there is only space. The sun found a practical foothold in early space exploration, and from there, dominoes began to fall.
The aerospace industry built solar panels for satellites and in the process learned to make them better and more affordable. The price of solar modules drops little by little until it becomes a reality to return to the earth in remote areas far from the grid. New applications have increased solar power generation, and the industry has once again become better at reducing the cost of solar construction and deployment.
With the further encouragement of subsidies, this cycle has lasted for decades and is a good example of a technological trend called Wright’s Law. Wright’s Law states that every time the total output of a new technology doubles (for example, from 100 megawatts of solar energy to 200 megawatts of solar energy), its cost will drop by a certain percentage.
Author, renewable energy advocate and investor Ramez Naam explained: “This is achieved by learning by doing. This is an innovation that improves the technology itself and reduces the labor, time, energy and energy required to produce the technology. An innovative mixture of raw materials. Technology.” This process is called the “learning curve.”
Although not all technologies have a strong learning curve, there are indeed many technologies that can be quickly acquired from an obscure world. (Be sure to check Roser’s post to learn more about Wright’s Law.)
In fact, as we deploy more solar energy, the cost of this technology has dropped at a predictable rate, which indicates a learning curve. For every doubling of solar installations, the price of solar cell modules will drop by about 20%.
As the total installed capacity of solar energy increased between 1976 and 2019, solar modules increased from US$106 per watt to US$0.38. However, despite falling costs, the price of solar energy has been much higher than that of mainstream electricity such as coal and natural gas for most of its history.
In a relatively short period of time, the cost of utility-scale solar energy (that is, a centralized power plant that supplies power to the grid) has changed from impractical to the cheapest. To demonstrate this trend, Rosser plotted the global average average energy cost (LCOE) of building new power plants. These are the prices estimated by the suppliers, they need to charge customers to make it break even during the entire life cycle of the new plant, regardless of energy, and they cover everything from construction to fuel prices to operations .
From 2009 to 2019, the electricity cost of new solar power plants dropped by 89%, surpassing cheap energy sources such as coal and some natural gas. The cost of new onshore wind power has been reduced by 70% (this is also due to the technological learning curve). The numbers themselves are breathtaking, but there is no substitute for good visual effects. Fortunately, it was Roser’s bread and butter. In short, this is the last ten years. (All prices in this table are not subsidized.)
You may have noticed that coal prices have not fluctuated. That’s because coal and natural gas are not on the learning curve like solar and wind energy. Despite the decline in natural gas prices, Roser believes that this is mainly due to the decline in fuel prices driven by hydraulic fracturing and the shale gas boom.
It is worth noting that fuel costs (of course zero for wind and solar energy) are a large part of the price of electricity provided by fossil fuels. It will fluctuate, but it will never be zero.
Roser wrote: “This means that for all non-renewable power plants that have these fuel costs, how much electricity costs may be reduced is a difficult lower limit.”
Given that current renewable energy power plants are on average cheaper than fossil fuel power plants, one would think that electricity suppliers will increasingly choose renewable energy sources instead of coal or natural gas. This is indeed the case. According to Roser, renewable energy accounted for 72% of global new power generation capacity in 2019. Despite the pandemic, it is estimated that by 2020, renewable energy will account for about 90% of global new power generation capacity.
Fossil fuels still account for the largest share of electricity production, and currently, the cost of building a new renewable energy plant is no less than the cost of operating an existing fossil fuel plant. In addition, the cost of solar energy varies by climate and country/region-with regulations and the cost of capital, land, and labor.
Nahm said that when the sun is on the other side of the earth, we will need better batteries (which appear to be in use) and storage devices to keep the juice flowing. The same challenging fact is that solar energy peaks in summer, while electricity demand peaks in winter.
Naam writes: “For example, in Germany, even if the electricity demand in winter is higher than in summer, the solar power generation in December is only 1/5 of the solar power generation in June.”
Earlier this year, Naam made a prediction assuming a “conservative” learning rate of 30% for solar power plant prices-remember, the early 20% tracked the learning rate of solar modules-and used the solar installed capacity estimated by the IEA Annual capacity growth is 16%. He divided the forecasts between ultra-low, low, medium and high cost positions.
These forecasts indicate that by 2030 or 2035, in the sunniest places, in other words, “building new solar energy is usually cheaper than operating established fossil fuel plants.” At the same time, by the late 2030s, the same may apply to relatively expensive places such as Northern Europe (at least in summer).
Of course, the prediction is only: prediction. They depend on how long the observed learning and deployment rate actually lasts. Naam said that prices may fall to their lowest point because they will encounter more unshakable costs, such as land and other resource costs.
Therefore, Naam said that although solar energy is an increasingly powerful player, it is not a panacea. Given the complexity of the real world, diversification makes sense. The low-carbon future may belong to a variety of energy sources, including wind power, nuclear power and hydropower. But no matter what happens, it seems that how we electrify modern life is rapidly changing.
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Post time: Jan-09-2021