The Declining Cost of Solar Power

1990 to 2015 solar

Solar Costs are Falling & Electricity Costs are Rising

In 2014, solar and wind investment totaled $270 billion worldwide. This amount is just about evenly divided between developing and developed countries. The cost of solar energy has dramatically declined in the last 15 years. Prices for solar systems have dropped 75% since 2000. Projections quoted in theEconomist magazine expect a total fall solar energy costs of 90% by 2025.Solar Chart

The cost of generating electric energy from petroleum is higher than from utility scale solar fields. It is approaching the cost of generating electric power from Liquified Natural Gas (LNG) in Asia however, solar electric power is still more costly than generating from LNG in Europe and more than double the cost of generating from natural gas in the US.

The cost of battery storage (storing energy gathered from solar) has fallen 60% since 2005. This phenomena along with the fall of the cost of solar systems will accelerate the penetration of solar into utility grids as large and small producers can sell electric power at times of highest value, and receive more money per kilowatt when
delivered at times of highest demand.

Another driver of solar penetration is increasing prices for utility supplied electricity. The Rocky Mountain Institute projects that the average residential bill will be $357 in parts of New York in 2030. This compares to $268 in payments for a comparable solar system with a battery bank. Businesses may be able to buy only 25% of their energy requirements from utilities by 2030.

Utilities are taking notice of this trend. The roles played by utilities will change as consumers use less power from utilities’ companies and solar production increases. In Germany, utilities will become more active in demand management and better management of distributed generation (DG) and utility scale storage. The grid in the 21st century will be different than it has been in the 20th century, driven by technological.

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Article by: Martin Learn, President HES Solar

Sources: Economist magazine, UNEP, Bloomberg New Energy finance, IHS Energy, and Bernstein Research