August 29, 2017 Read More →

On the Blogs: ‘Why Solar Keeps Being Underestimated’

CarbonBrief.org:

Why is there such a gap between expectation and reality? Admittedly, solar’s growth, starting from a miniscule base, has been spectacular. Few technologies have taken hold so fast.

Consumers proved willing to pay a premium for green technology on their own rooftops, while ambitious policy instruments like Germany’s Feed-in-Tariff and California’s Renewable Portfolio Standard pushed renewables much faster than anticipated.

These dynamics have so far been poorly captured by energy system models, which tended to represent the complex mix of different climate policies in a simplified and stylised way – for example, as a single, economy-wide carbon price. These models also assume that society will always seek to minimise costs, ignoring the potential role of personal preferences.

Most importantly, faster initial deployment caused costs to decline rapidly and consistently. In fact, solar module costs decreased by around 23% with each doubling in installed capacity, a phenomenon dubbed “technological learning“. Traditionally, technological learning has been inadequately reflected in many models.

The levelised costs of solar are now undercutting fossil fuels in competitive markets. In locations as diverse as Dubai, Mexico, and Chile, the best solar PV projects are selling power at less than $0.03 per kilowatt hour (kWh). In India or Zambia, some PV projects are producing power at or below $0.06/kWh, outcompeting coal.

One final factor explaining why models have underestimated solar is their cost projections for other technologies. As a result, they have not only overestimated the costs of solar, they have also been too optimistic about cost reductions for the alternatives or even failed to foresee cost increases.

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