The incredible cost reduction of solar energy

Solar energy spain

Society continues to argue about whether it is wise not to bet heavily on renewable energy (solar energy, wind among others). Energy technologies are overtaking the governments of half the world and they are on the way to turning this debate into something totally out of date.

One of the great problems or impediments that some renewable energies have is the high initial investment cost. However, according to a new report from GTM Research, the prices of solar energy installations will continue to decline by up to 27% by 2022. Iran on average dropping prices by 4,4% on average to 27%.

Solar energy prices drop

The report makes a forecast on the prices of solar photovoltaic systems. In it, a continuous trend can be observed that contributes to the drop in the prices of solar projects. These prices will not only be lowered in price due to the decrease in the price of the modules, but also by cheaper investors, followers, and even labor costs.

All regions that can opt for renewable energies will benefit from this price drop. Recent record low prices have come from India, where the country's auction system has been in steady production and has resulted in highly competitive bids. This has caused prices to be lower and lower.

This is great news for all those people who opt for renewable energy for power generation. Will this be the new step to evolve in the energy transition towards the predominance of renewables?

This is all great, but it's not enough. If solar energy wants to be a global player, it needs to be more profitable than other short-term energy sources: Currently it is already, in addition, in more than 50 countries, solar energy is the cheapest energy of all.

Kurnool Ultra Mega Solar Park

The energy battle is 20 years ahead

Although we normally look at the production price per kilowatt hour, that is not the most interesting price for adoption of renewable energies. At least, in a context like the current one in which renewables do not have subsidies to pay for investments.

Energy systems with giant structures in investments are made with several years of anticipation, even decades. That's one of the reasons why adoption of renewables is slow: once a nuclear, gas, coal (or any other type) plant has been built, it is not feasible to shut it down until the end of its useful life. If it were, normally nor the investment would be recovered, which is not going to happen because of the big lobbies out there.

In other words, if we want to study in detail how the composition of the energy market is going to evolve, we must look at how much it costs to start up each energy from scratch. The short and medium term profitability of power plants is key in the final decision of businessmen and politicians; Or, put another way, energy that is very cheap to produce and requires a very high initial investment will never be adopted.

Solar power can compete with anyone

According to several reports from more than one body, on the energy industry: «Unsubsidized solar power is starting to drive coal and natural gas off the market In addition, new solar projects in emerging markets are costing less than wind.

Portugal will supply four days of renewable energy

And, indeed, in almost sixty emerging countries the average price of the solar installations needed to producing each megawatt has already dropped to $ 1.650.000, below the 1.660.000 that wind energy costs.

As we can see in the previous graph, the evolution is quite clear. This means that emerging countries, which in general are the ones with the greatest increase in CO emissions2.

Spain does not reduce CO2 emissions

They have found a way to generate electricity at a competitive price and in a fully renewable way.

The price of solar energy vs coal price

This year has proven a race for solar energy in all aspects, since technological evolutionTo auctions where private companies compete for those huge contracts for electricity supply, month after month a record is set for the cheapest solar power.

Last year he started a contract for produce electricity for $ 64 per MW / hour from the country of India. A new agreement in August lowered the figure to an incredible figure of just over $ 29 megawatt time in Chile. That amount is a milestone in terms of the cost of electricity, being almost a 50% Organic than the price offered by coal.


With the report Levelized Costs Of Energy (Levelized Costs of the different Energy technologies, without subsidies). It is found that each year, renewables they are cheaper and the conventional ones more expensive.

And the cost trend is more than clear 😀

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  1.   German said

    Well, I bought panels and batteries in 2015 and now I look for them online and they are at the same price or MORE EXPENSIVE. The same model, brand, capacity ... How is it possible?