Cost Trends in Renewable Energy & Why Solar Capacity Continues to Rise
by Andrew Ritch
We’ve all seen the “reverse hockey stick” curves that illustrate how the cost to install renewable energy has fallen dramatically over the last 10 years. While the rates of overall decrease have become less dramatic as these technologies and supporting industries have matured, costs will continue to fall.
Lazard’s latest annual Levelized Cost of Energy Analysis (LCOE 14.0) shows that as the cost of renewable energy continues to decline, certain technologies (e.g., onshore wind and utility-scale solar), which became cost-competitive with sources of conventional generation several years ago on a new-build basis, continue to maintain cost competitiveness. This gap will only widen.
Within this graph, the most striking numbers pertain to utility scale solar projects (both crystalline and thin film technologies), which collectively occupy a tight cost range of between $29 and $42 / MWh. Compare this with the cost ranges for conventional resources (the dark blue bars).
Solar has many advantages
Solar energy, in particular, presents multiple advantages over other, competing technologies. First, solar is a truly renewable resource. It can be readily captured and used, and is available each and every day. Practically speaking, the energy from our sun is inexhaustible, and it is estimated that a total of 173,000 terawatts (trillions of watts) of solar energy strikes the Earth at any given moment. That’s more than 10,000 times the world’s total energy use that is theoretically available each and every minute of every day. What if we simply captured (and stored, with the advent of advanced storage technologies) a small percentage of this?
Other advantages include the fact that solar energy can be used for a variety of different purposes, by generating either electricity or heat. Solar energy can also be used to produce electricity in remote or underserved areas, such as those without access to the grid.
Solar energy systems require little maintenance - the most important of which is simply keeping the panels clean of dust, debris and shading to maximize production. And because there are no moving parts, there is no wear and tear on the system’s components. The production performance of panels themselves typically degrades ~ 1% per year, but are also under manufacturer’s warranty for their full useful life (~25 years, although they continue generating energy far beyond that).
Finally, technological innovation in the solar power industry is constantly advancing. Advances in quantum physics and nanotechnology can potentially increase the effectiveness of solar panels and double, or even triple, the electrical input of the solar power systems
Solar projects set new capacity records almost every year
These falling costs have contributed to the development of new, massive solar projects around the world.
The world’s first “mega” solar facility was Ontario's 97 MW Sarnia Photovoltaic Power Plant, which went online in 2010. The Huanghe Hydropower Golmud Solar Park was the first triple-digit-MW solar facility - 200 MW, in 2012. In August 2012, the Agua Caliente Solar Project in Arizona reached 247 MW only to be passed by three larger plants in 2013.
In 2014, two plants were tied as the world’s largest: Topaz Solar Farm, a 550 MW PV plant in CA’s central coast area and a second 550-MW plant, the Desert Sunlight Solar Farm located in CA’s eastern desert region. In June of 2015, the 579 MW Solar Star project came online in the Antelope Valley region of Los Angeles County, California.
In 2016, the 850 MW Longyangxia Dam Solar Park n China was inaugurated, which was surpassed in 2019 with the completion of the Pavagada Solar Park in Karnataka, India (2050 MW) - the first solar power park to cross the 2 GW mark.
Bhadla Solar Park became the largest solar park in 2020 with a capacity of 2,245 MW. Spread across more than 14,000 acres, the park is located in India’s desert state of Rajasthan. Extreme economies of scale for this project ultimately translated into an energy generation cost of $0.034 / KWh - about the same as the "avoided cost" of electricity generated from coal in the US.
Donovan Energy has decades of experience in planning and developing renewable energy systems, with specific expertise in solar. If you are interested in learning more about the cost savings that can be created by the installation of a renewable energy generation system, we’d like to help.