World Energy Hits a Turning Point: Solar is Cheaper than Wind and Coal
Transformation is happening in global energy markets as Solar power, for the first time, has become the cheapest form of new electricity.
This has happened in isolated projects in the past: an especially competitive auction in the Middle East, for example, resulting in record-cheap solar costs. But now unsubsidized solar is beginning to out-compete coal and natural gas on a larger scale, and notably, new solar projects in emerging markets are costing less to build than wind projects, according to fresh data from Bloomberg New Energy Finance.
Renewables are robustly entering the era of undercutting fossil fuel prices. Playing a huge part in this story is India and China, which has been rapidly deploying solar and helping other countries finance their own projects.
The world’s top three solar power plants:
2016 has seen a remarkable run for solar power. Auctions, where private companies compete for massive contracts to provide electricity, established record after record for cheap solar power. It started with a contract in January to produce electricity for $64 per megawatt-hour in India; then a deal in August pegging $29.10 per megawatt hour in Chile. That’s record-cheap electricity—roughly half the price of competing coal power.
The overall shift to clean energy can be more expensive in wealthier nations, where electricity demand is flat or falling and new solar must compete with existing billion-dollar coal and gas plants. The world recently passed a turning point and is adding more capacity for clean energy each year than for coal and natural gas combined. The BNEF report, called Climatescope, ranks and profiles emerging markets for their ability to attract capital for low-carbon energy projects. The top-scoring markets were China, Chile, Brazil, Uruguay, South Africa, and India.
However, the build-up of wind and solar takes time, and fossil fuels remain the cheapest option for when the wind doesn’t blow and the sun doesn’t shine. Coal and natural gas will continue to play a key role in the alleviation of energy poverty for millions of people in the years to come.
But for populations still relying on expensive kerosene generators, or who have no electricity at all, and for those living in the dangerous smog of thickly populated cities, the shift to renewables and increasingly to solar can’t come soon enough.
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