Tuesday, December 19, 2017

Continued plunge in cost of solar

Over the last 3 years, the costs of unsubsidised industrial-scale solar have plummeted.

Source: IEEFA

The cost of onshore wind is also falling rapidly:

It is clear also that the same factors driving rapid deflation in solar costs are driving down the cost of both onshore and offshore wind. Greater policy certainty, lower capital costs, ongoing technology improvements, learning by doing and economies of scale are all supporting this trend. Last week saw the cost of onshore wind in Alberta, Canada, drop 55 percent to $37/MWh relative to 2016 prices.  Declines of some 50 percent in onshore wind tariffs have been seen also in India and Mexico, and in the offshore wind market in Germany and the United Kingdom. 

[Read more here]

At low levels of renewables penetration, very little storage is needed.   The existing grid copes with the variability inherent in wind and solar without difficulty.  As the percentage rises, more storage is required.  But as the amount of storage needed rises over time, its cost is simultaneously falling.

Let's assume that 12 hours of storage is needed at 100% renewable penetration.   Today, using the Tesla Powerpack, that would cost $53/MWh.  Assume solar costs $20/MWh (the average of the last three data points in the chart above), then the total cost of solar plus storage would be $73/MWh.  But in three years, that same storage will cost half of $53 (assuming a sustained 20% per year decline) and solar will cost 70% of its cost today (assuming a sustained 10% per year decline).  12 hours of storage with 100% solar will cost $41/MWh.  In six years' time, costs for the storage/solar package could be down to $25/MWh.  And these projected cost declines are probably conservative. 

Whichever way you slice and dice the data, it's abundantly clear that thermal coal mines and coal-fired power stations are on borrowed time.  Over the next six years, the cost of solar plus generous amounts of storage will first fall below the total cost of new coal power stations, meaning no more will be built, and then below the cost just of fuel used, leading to the rapid closing down of existing coal power stations.  By 2030, it is unlikely that there will be any coal power stations left. 

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