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While solar power is renowned for the savings it helps domestic and commercial customers to make, it is now set to become the cheapest form of electricity production in many regions of the world – following massive cost reductions.
A new study, published by Agora Energiewende, a leading German think-tank dedicated to the German energy transition, outlined just how solar was going to become the cheapest form of electricity production in their report Current and Future Cost of Photovoltaics.
Huge reductions on solar costs, year-on-year
The report looks at projected costs of solar photovoltaic on a global scale from now to the year 2050. It identified that the cost of producing solar power in the UK will have declined to between 4.2 and 10.3p/kWh by 2025, and by 2050 to as low as 2.0 to 7.4p/kWh.
However, while feasible, these reductions are still reliant on financial and regulatory frameworks, due to the high capital intensity of photovoltaic installations. With proper regulation and support, we could see these reduced costs very soon; but with poor regulation, interest rates could be affected – raising the cost of solar plants by up to 50 percent.
The report highlights that most scenarios fundamentally underestimate the role of solar power in future energy systems by only foreseeing a small contribution from solar power. Agora say that a fundamental review of solar’s future role is necessary to understand the significant impact it could have on our green future and energy savings.
Solar power savings: In the government’s hands
Talking about the potential role of solar in our future, Dr. Patrick Graichen, Director, Agora Energiewende says:
“The study shows that solar energy has become cheaper much more quickly than most experts had predicted and will continue to do so.”
“Governments that want to deliver lower cost energy for consumers should therefore reconsider their plans. 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.”
“Favourable financing conditions and stable legal frameworks are vital conditions for cheap, clean solar electricity. It is up to policy makers to create and maintain these conditions.”
Ged Ennis, Director, Low Carbon Energy adds:
“The next government needs to act quickly. They need to agree a way forward to get the UK solar industry on track to deliver its impressive cost reduction potential for the benefit of consumers.”
“Solar is the most popular energy generation technology – and the UK is in a great position to take advantage. In fact, solar will potentially be the first renewable to compete directly with fossil fuels without subsidy. We shouldn’t be playing politics with our future.”
To find out more about the benefits of solar power, visit the solar PV section on our website.