Solar panels are cheaper than fossil fuels
This year was the year solar panels finally became cheaper than fossil fuels.
Installing a new solar panel is cheaper than a comparable investment in coal, natural gas or other options as the World Economic Forum’s Renewable Infrastructure Investment Handbook shows.
“Renewable energy technology, especially solar and wind, has made exponential gains in efficiency in recent years, enough to achieve economic competitiveness and, in an
increasing number of cases, grid parity.”
“For instance, the unsubsidized, levellized cost of electricity (LCOE) for utility- scale solar photovoltaic, which was highly uncompetitive only five years ago, has declined at a 20% compounded annual rate, making it not only viable but also more attractive than coal in a wide range of countries.”
According to the report this happens in at least 30 countries and grid parity will be achieved in the next years in two-thirds of all nations.
“Renewable energy has reached a tipping point,” told Michael Drexler, who leads the infrastructure development investing at the WEF in a statement. “It is not only a commercially viable option, but an outright compelling investment opportunity with long-term, stable and inflation-protected returns.”
This is already paying off as according to the US Energy Information Administration’s estimates in 2016 utilities added 9.5 GW of photovoltaic capacity to the US grid, making the solar energy the top fuel source for the first time in a calendar year. Also, homes and business made the electrical generation to reach 11.2 GW.
But global investment in renewable energy is still too low and far behind levels that would help to avoid catastrophic global warming, according to the United Nations. In 2016 investments were only 25% ($286 billion) of the $1 trillion goal set in Paris last year. According to the WEF barriers to investment are mostly political rather than economic and its lack of standardization makes it difficult to reassure investors.
Nonetheless, solar energy is expected to fall half the price of electricity from coal or natural gas within a decade or two. But we’ve already seen some cases. In August, energy firm Solarpack in Chile was able to sell electricity at just $29.1 per megawatt hour, which is 58% below prices from a new natural gas plant.