Global solar power costs have fallen dramatically over the last five years, thanks to lower module prices, lower balance of system costs, and increased competition at the development and EPC level. Financing costs have also decreased as investors recognize the low-risk profile of solar assets. As a result, in many areas solar power is now cheaper than most other power sources.
“For systems with the right economies of scale — 10 MW and above — solar power can now be generated at between $70 and $100 per MWh. That price is more than four times lower than in 2009,” says Thierry Lepercq, founder and president of France-based Solairedirect, a worldwide developer of large PV power plants with low levelized cost of energy (LCOE).
As estimated by the U.S. Department of Energy, the LCOE of solar competes quite closely with more conventional sources of energy. Coal costs around $95 per MWh, natural gas costs between $65 and $105 per MWh, and nuclear comes in around $103 per MWh. It is worth noting, the DOE’s estimation puts solar at $130 per MWh. And with soft costs varying so much by country, that’s another factor to consider.
We’ve already seen some signs of solar’s competitiveness, such as the decision earlier this year in Minnesota in favor of solar as a cost-competitive energy source.
Further cost reductions can be expected as all cost factors continue to improve, down to $50 – $70 per MWh by 2020, according to Lepercq. By then, solar power would be by far the cheapest energy in the world.