Solar PV is becoming increasingly popular in the business world, with Google’s recent decision to commit to a $750 million (£487 million) scheme to deliver rooftop installation projects in the US just the latest in a growing line of major global investments.
Last month, Agora Energiwende, a leading think tank from Germany – the European leader in solar technology – concluded that this popularity is only set to increase thanks to rapidly falling costs that are closing in on traditional fossil fuel power sources.
Within the last decade alone, the cost of power from large solar installations in Germany has dropped by over 75 per cent, and even without any new major technological breakthroughs, the Agora Energiewende calculates that costs will continue to fall into the future.
As a result, it predicts that solar power will soon be the cheapest source of electricity in many parts of the world.
For the UK specifically, the report expects the cost of solar PV to fall to between 4.2-10.3p/kWh by 2025, and as low as 2.0-7.4p/kWh by 2050. By comparison, electricity from new gas-fired plants in the UK costs around 8p/kWh and from new nuclear plants will cost 8-11p/kWh.
The report therefore calls for governments to reconsider the planned role for solar in their energy mix, which is often based on outdated cost estimates.
Dr. Patrick Graichen, director at Agora Energiewende, said: “Solar has become cheaper much more quickly than most experts had predicted and will continue to do so.
“Until now, most [governments] only anticipate a small share of solar power in the [energy] mix. In view of the extremely favourable costs, solar power will on the contrary play a prominent role.”
However, the report points out that inadequate regulations and financing schemes can increase the cost of solar power by up to 50 per cent and therefore remain the primary barrier for achieving the technology’s potential.
The news is particularly topical given the results of the Government’s first Contracts for Difference (CfD) renewable energy auction, in which the solar industry largely lost out to competition from the larger but more expensive onshore wind industry.