Fraunhofer: Solar power will cost 2 cts/kWh in 2050

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“In a few years, solar energy plants will deliver the most inexpensive power available in many parts of the world. By 2025, the cost of producing power in central and southern Europe will have declined to between 4 and 6 cents per kilowatt hour, and by 2050 to as low as 2 to 4 cents.” These are the main conclusions of a study by the Fraunhofer Institute for Solar Energy Systems commissioned by the German think tank Agora Energiewende. In view of these conclusions, “plans for future power supply systems should therefore be revised worldwide”, says Patrick Graichen, Director of Agora.

According to Agora Energiewende, which describes itself as “an independent German think tank dedicated to research on the future of the electrical power system”, the Fraunhofer study “uses only conservative assumptions about technological developments expected for solar energy. Technological breakthroughs could make electricity even cheaper, but these potential developments were not taken into consideration.”

Solar power is already cost-effective, Agora notes. “In the sunny, desert country of Dubai, a long-term power purchase contract was signed recently for 5 cents per kilowatt hour, while in Germany large solar plants deliver power for less than 9 cents. By comparison, electricity from new coal and gas-fired plants costs between 5 and 10 cents per kilowatt hour and from nuclear plants as much as 11 cents.”

According to the study, “most scenarios fundamentally underestimate the role of solar power in future energy systems.” The study shows “that solar energy has become cheaper much more quickly than most experts had predicted and will continue to do so,” says Dr. Patrick Graichen, Director of the Agora Energiewende in a press release. “Plans for future power supply systems should therefore be revised worldwide. Until now, most of them only anticipate a small share of solar power in the mix. In view of the extremely favourable costs, solar power will on the contrary play a prominent role, together with wind energy – also, and most importantly, as a cheap way of contributing to international climate protection.”

The study also reveals “that electricity generation costs for solar power are highly dependent on financial and regulatory frameworks, due to the high capital intensity of photovoltaic installations.  Poor regulation and high risk-premiums reflected in interest rates can raise the cost of solar plants by up to 50 percent. This effect is so great, that it can even outweigh the advantage offered by greater amounts of sunshine.” According to Graichen: “Favourable financing conditions and stable legal frameworks are therefore vital conditions for cheap, clean solar electricity. It is up to policy makers to create and maintain these conditions.”

The full study can be found here.

Comments

  1. says

    Solar PV module prices in 2014 were around 75% lower than their levels at the end of 2009. Between 2010 and 2014 the total installed costs of utility-scale PV systems have fallen by 29% to 65%, depending on the region. The LCOE of utility-scale solar PV has fallen by half in four years. The most competitive utility-scale solar PV projects are now regularly delivering electricity for just USD 0.08 per kilowatt-hour (kWh) without financial support..

  2. says

    Present solar PV systems have a practical operating lifetime of 25 years. Systems in place today will be obsolete by 2040. We need more data before anyone can say solar energy is competitive. All the projections given for 2 cents per kilowatt-hour ignore the costs of backup power that may run inefficiently due to the intermittent operation of solar.

    An interesting way of look at solar is to consider the energy return of investment (EROI). This is the amount of energy produced by an energy source divided by the energy needed to produce the source. Usually the energy needed to produce a source is fossil fuels. EROI for petroleum is typically 10. A recent study of solar energy in Spain showed an EORI of 2.45.

    Promoters of solar energy are too optimistic. They leave taxpayers and ratepayers the problems of cleaning up their messes.

    James H. Rust, Professor of nuclear engineering

    • Louise Stoningtonl says

      There used to be oil in the US that just gushed out of the ground. For that oil, you could get 50, maybe even 100 times as much fuel as you had to use to get it. That is gone. Now they pump down chemicals to push it out of the ground, more energy intensive – maybe then you get 10 times more fuel than you have to use. Or they have to dig out the sticky tar and boil it and dilute it before it can be refined. That takes almost as much fuel as you get! Have you seen pictures of the tar sands tailings ponds? That is a mess. A solar spill is a nice day.
      There are solar panels made 40 years ago that are still functioning. Studies show a slight (5 to 10%) loss in power production after 25 years.

    • William Sharpe says

      The expected lifespan of an energy source is part of its LCOE calculation. How can you not know this?

      The necessity for backup power is also a non-issue. Battery storage has many additional benefits to the grid which make it sensible to install even at prices far above current (rapidly dropping) costs. Basically, gas peaking plants were an expensive mistake and many existing plants should not have been built.

    • gg says

      It is interesting that “James H. Rust, Professor of nuclear engineering” is blissfully unaware that the 1970s/1980s era solar panels with “a practical operating lifetime of 10 years” are still functioning in many places. Indeed, their “practical operating lifetime” seems to have been severely underestimated! So what about the new panels, which are supposed to last twice as long as the inferior, old ones?

      And don’t get me even started on EROI. German companies now manufacture panels with less than half a ton of CO2 emissions per kWp. Even with a modest capacity factor of 15%, the amount of electricity generated within 30 years can’t possibly be so low as to only double or triple the energy investment. That Spanish estimate of EROI of less than three is utter BS. Why not compare it with nuclear plants using the same criteria? :-p http://www.nature.com/scientificamerican/journal/v308/n4/box/scientificamerican0413-58_BX2.html

      But maybe that’s what nuclear energy REALLY does to you: it won’t give you cancer, but it overwhelms your coolness perception centers, wipes out your critical thinking skills, and makes you casually dismiss actual historical data.

    • stuart says

      Lithium batteries with efficiency of 90% emerging as the key to back up… Battery cost and robustness is nearly there… I think Elon Musk is right…

    • Sean says

      Professor Rust says “Promoters of solar energy are too optimistic. They leave taxpayers and ratepayers the problems of cleaning up their messes.”

      By that metric, by every economic measure we need to maximize solar electricity generation. The cost left to taxpayers in the US from coal-fired electrical plants, including those those killed and sickened by the mining, transport and burning of coal, is conservatively estimated at more than $0.17/kWh. http://www.chgeharvard.org/sites/default/files/epstein_full%20cost%20of%20coal.pdf. Lifecycle externalities for solar PV at least 90% lower. http://pubs.acs.org/doi/pdf/10.1021/es071763q. Of course using solar power to produce solar panels would drop that figure even lower. So, $0.17/kWh or more for coal, less than $0.05 for solar. Which costs the taxpayers more? And which leaves a bigger mess to clean up?

  3. Math Geurts says

    How independent are Agora and Fraunhofer really?

    “Costs (of CSP and PV) are projected to go down over time, reaching US$0.06–0.11/KWh for attractive sites in 2050″ “In an alternative “fast-learning” scenario, generation costs drop to $0.06–0.07/kWh for CSP, and $0.09/kWh for PV”

    Be aware that Europe is not considered to be such an attractive site.

    http://www.sciencedirect.com/science/article/pii/S0360544215007690

  4. Jay says

    A very promising bit of information.

    The best boost to solar will come when reliable auxilliary sources supplement the primary solar source. We still need to address the power source at nights and cloudy days.

Trackbacks

  1. […] “In a few years, solar energy plants will deliver the most inexpensive power available in many parts of the world. By 2025, the cost of producing power in central and southern Europe will have declined to between 4 and 6 cents per kilowatt hour, and by 2050 to as low as 2 to 4 cents.” These are the main conclusions of a study by the Fraunhofer Institute for Solar Energy Systems commissioned by the German think tank Agora Energiewende. In view of these conclusions, “plans for future power supply systems should therefore be revised worldwide”, says Patrick Graichen, Director of Agora.  […]

  2. […] Today, in many parts of the US, wind power is the cheapest source of new electricity, when the wind is blowing. The same is true in northern Europe. On the horizon, an increasing chorus of voices, even the normally pessimistic-on-renewables IEA, see solar as the cheapest source of electricity on the planet, heading towards 4 cents per kwh. Or, if you believe more optimistic voices, a horizon of solar at 2 cents per kwh. […]

  3. […] He also highlighted that “In a few years, solar energy plants will deliver the most inexpensive power available in many parts of the world. By 2025, the cost of producing power in central and southern Europe will have declined to between 4 and 6 cents per kilowatt hour, and by 2050 to as low as 2 to 4 cents.” Check it out for yourself. […]

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