Surprising solar projection by respectable organisation

See Current and Future Cost of Photovoltaics

Or Google “Fraunhofer solar future”.

This is a hefty report by a very German organization i.e. they spent a year convening groups of experts in every aspect of solar and hammering all the aspects of death.

Takeaways- though it’s pretty easy to read

  1. Solar power will soon be the cheapest form of electricity in many regions of the world. Even in conservative scenarios and assuming no major technological breakthroughs, an end to cost reduction is not in sight. Depending on annual sunshine, power cost of 4-6 CT/kWh are expected by 2025, reaching 2-4 CT/kWh by 2050 (conservative estimate). [Lignite (nasty coal) is about 4-5 today and generally getting more expensive. So, in 2025 crossover is to be expected. Note that this does not include any cost rise from carbon pricing. So, carbon pricing that doesn’t have a major effect by 2025 may be irrelevant!]
  2. Most scenarios fundamentally underestimate the role of solar power in future energy systems. Based on outdated cost estimates, most scenarios modeling future domestic, regional or global power systems foresee only a small contribution of solar power. The results of our analysis indicate that a fundamental review of cost-optimal power system pathways is necessary. [Note that utility wind and solar cost bands now overlap 2015 and solar is getting cheaper faster than wind. – Wikipedia] Various scenarios suggest 20-40% utility of solar by 2050.
  3. Solar photovoltaics were already today a low-cost renewable energy technology. Cost of power from large scale photovoltaic installations in Germany fell from over 40 CT/kWh in 2005 to 9CT/kWh in 2014. Even lower prices have been reported in sunnier regions of the world, since a major share of cost comptes is traded on global markets. [Dubai 5CT]
  4. Financial and regulatory environments will be a key to reduce costs in the future. Cost of hardware sourced from global markets will decrease, irrespective of local conditions. However, inadequate regulatory regimes may increase cost of power upto 50 percent through a higher cost of finance. This may even over compensate the effect of better local solar resources. [Southern Germany can be more profitable than Spain because of the low risk, stable nature of the German market and financing arrangements]

My additional comments:

This paper has taken great pains to err on the conservative side in all aspects of its work to maintain respectability. Even its optimistic scenario has a lot of conservatism baked in underneath.

They have not punted much on new solar technologies- they mention them, but don’t assume sudden breakthroughs because of the inertia effect, I suspect.

Despite this, solar cells of twice today’s average efficiency would effectively halve many of the cost factors and mean that many existing solar sites could be retrofitted profitably.

They also seem to assume fixed axis setting. Obviously, dual axis can have a major effect on work function and thus output but as a material and operational cost. There’s a lot of innovative stuff in this area which I don’t think was included as it’s a bit contentious.

So, this is a good solid report that despite being conservative is well based and should cause anyone thinking of investing in new nuclear or coal to stop!

Since, I am more interested in trying to find the center of the potential futures rather than a safe lower limit, have no reputation to defend, I would put the cost effectiveness and roll out as better, earlier and largely discount the most negative scenarios.

After all, if the IEA can publish future production based on “undiscovered” reserves, surely I can with more confidence punt on undiscovered technology in a very fast moving area!


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