The price of solar energy has dropped enormously in recent years. Even established institutions such as the International Energy Agency had not anticipated such price drops.
Renewable energy expert Ramez Naam is also surprised by this evolution. “The price of solar energy has fallen faster than anyone, including myself, had predicted. Modeling the recent price drops suggests that solar energy will continue to fall in price faster than anyone expects. Without any exaggeration, you can say that the low price of solar energy can change the world. ”
Economies of scale
According to Naam, solar energy has evolved to its current price level through global economies of scale. Based on calculations from seven different data series, Naam notes that the price of solar energy decreases on a large scale by 30 to 40% with every doubling of the cumulative installed power.
Third phase of clean energy
Naam therefore predicts that the world is about to enter a ‘third phase of clean energy’. A world in which building new solar and wind energy projects is cheaper than running existing fossil fuel plants.
“With average prices in the sunny parts of the world of 1 to 2 dollar cents per kilowatt hour by 2030 or 2035, solar energy is routinely cheaper than operating pre-built fossil fuel plants, even in the ultra-cheap natural gas world we live in now, “Naam concludes.