June 9, 2020 Read More →

Cost of solar power generation will approach zero in sunny regions by 2030-40

PV Magazine:

U.S.-based energy transition think tank the Institute for Energy Economics and Financial Analysis (IEEFA) has taken a swipe at intergovernmental peer the International Energy Agency (IEA) over the latter’s prediction the Covid-19 crisis will slow the dramatic cost reductions achieved by the solar industry.

Positing the argument that the final cost of solar energy depends on solar resource, the capital cost of generation facilities and the rate of return on finance, IEEFA’s Tim Buckley pointed out PV projects have continued to be deployed at scale during the global health crisis as finance interest rates have plunged to historic lows because central banks are attempting to propel all types of economic investment during the current shock.

Buckley, IEEFA’s director of energy finance research for Australasia, pointed to the U.S. Treasury’s ten-year bond interest rate as an example, with bonds with a 2.7% interest rate at the start of last year now offering a 0.7% cost which can be fixed in for the longer term.

Buckley’s report sets IEEFA in opposition to the IEA, which has been routinely criticized for under-estimating the rate of solar deployment in its forecasts. IEEFA, Buckley wrote in the report which was published yesterday, “expects the International Energy Agency to continue to be surprised every year over the coming decade at the speed of ongoing technology-driven [cost] deflation and hence the rate of uptake of renewable energy, electric vehicles and battery storage, as it has been for the past decade, every year without fail.”

Rather, the think tank predicted the cost of generating electricity from solar would be near zero in high-resource locations such as Arizona, Spain, Rajasthan and North Queensland by 2030-40, Buckley added. Such a development will in turn accelerate the rush to even out intermittent supply by improving storage solutions including pumped hydro; lithium-ion batteries; Power-to-X with hydrogen, aluminum or ammonia; and other solutions including demand-response, grid interconnectors and gas-fired, grid-back-up peaking plants. 

[Max Hall]

More: Historic-low interest rates will power ahead astonishing solar cost reductions

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