Solar plants are now the cheapest form of electricity generation to build, according to a new report from the International Energy Agency (IEA).
The IEA’s World Energy Outlook 2020 said that for the first time, solar power stations cost less to construct than fossil fuel-based plants.
It explained that supportive policies and maturing technologies are enabling very cheap access to capital for solar builds in leading markets.
“With sharp cost reductions over the past decade, solar PV is consistently cheaper than new coal- or gas-fired power plants in most countries, and solar projects now offer some of the lowest cost electricity ever seen,” the IEA said.
The report offers four possible scenarios for the world’s energy landscape over the next 30 years, which includes revisions of the IEA’s previous estimates.
The main scenario expects a 43% higher solar output by 2040 than the IEA expected in 2018.
This can be partially attributed to analysis showing that solar power is 20-50% cheaper than initially thought, as explained by Carbon Brief.
“Previously the IEA assumed a range of 7-8% for all technologies, varying according to each country’s stage of development.”
“Now, the IEA has reviewed the evidence internationally and finds that for solar, the cost of capital is much lower, at 2.6-5.0% in Europe and the US, 4.4-5.5% in China and 8.8-10.0% in India,” Carbon Brief said.
Eskom’s plans for renewables
Although the data on cheaper solar prices may have no direct bearing on the end consumer’s pocket, it could help drive increased adoption of solar generation by power producers and cut down carbon emissions.
The cost to build power plants remains one of the biggest reasons that countries around the world – including South Africa – still opt for coal or gas powered stations.
Eskom currently relies on coal-fired power stations to produce 90% of its electricity, while the remainder is made up of pumped storage, hydro, gas, nuclear, and wind generation.
The Energy department’s Integrated Resource Plan of 2019 has outlined a shift away from dependence on coal power over the next decade, in favour of alternatives such as wind, solar and gas.
By 2030, the department expects around 11,000 megawatts of coal power to be decommissioned; however, when coupled with new coal sources, it will still contribute the biggest proportion of South Africa’s energy mix (approximately 33,400 megawatts – or 43% of total capacity).
Over the same period, renewable energy is expected to see the biggest climb to about one third (26,000 megawatts, or 33%) of total installed capacity.