(ANTIMEDIA) Solar power is now the same price or cheaper than traditional electricity in 30 countries around the world, according to a recent report from the World Economic Forum. This “grid parity” signals hope for the growth of alternative, cleaner sources of energy.
The report, entitled, “Renewable Infrastructure Investment Handbook: A Guide for Institutional Investors,” was released this month and suggests the expanding industry is worth funding. One of the reasons for this is the rapidly increasing capacity of the solar power grid.
As Quartz summarized:
“In 2016, utilities added 9.5 gigawatts (GW) of photovoltaic capacity to the US grid, making solar the top fuel source for the first time in a calendar year, according to the US Energy Information Administration’s estimates. The US added about 125 solar panels every minute in 2016, about double the pace last year, reports the Solar Energy Industry Association.”
“The solar story is even more impressive after accounting for new distributed solar on homes and business (rather than just those built for utilities), which pushed the total installed capacity to 11.2 GW.”
The World Economic Forum’s analysis, released this month, highlights the increasing profitability of solar power, which is vital if the technology is to gain ground. As the analysis notes, “renewable energy technology, especially solar and wind, has made exponential gains in efficiency in recent years, enough to achieve economic competitiveness and, in an increasing number of cases, grid parity.”
Further, the report explains that the cost of solar and other alternate forms of energy has dropped while the cost of coal has remained the same:
“While the average global LCOE [levelized cost of electricity] for coal has hovered around $100/MWh for over a decade, solar has seen its cost plummet from around $600 a decade ago to $300 only five years later, and now close to or below $100 for utility-scale photovoltaic. Wind LCOE is around $50.”
Because of this, they note, in many countries, “it has become more economical to install solar and wind capacity than coal capacity.”
According to the report, “more than 30 countries have already reached grid parity without subsidies, and around two thirds of the world should reach grid parity in the next couple of years.”
They cite Chile, Mexico, Brazil, and Australia as among the 30 countries that have already reached grid parity, also citing a report by the International Renewable Energy Agency (IRENA) predicting solar power’s levelized cost of electricity “will still fall by 59% over the next decade, while the same metric for wind will compress by 26% for onshore turbines.” In another example, though it is not mentioned specifically in the report, Scotland’s solar energy grid grew 32% between 2013 and 2014.
Interestingly, developing countries exerted the biggest efforts to develop solar power. The report explains:
“Developing countries represented the majority ($156 billion) of investment commitment to renewables in 2015, led by China ($102.9 billion), India ($10.2 billion) and Brazil ($7.1 billion). Developed markets invested $130 billion in 2015, led by Europe ($48.8 billion), the United States ($44.1 billion) and Japan ($36.2 billion). “
Still, levels of investment in solar power lag far behind the standards set at the Paris climate accord. “Global renewable investment last year was $286 billion, or 25% of the $1 trillion goal,” Quartz notes.
But there is hope. As the report documents:
“According to UNEP [United Nations Environment Program] and Bloomberg New Energy Finance (BNEF), total investment commitment to renewable energy across asset classes in 2015 was $285.9 billion, surpassing the 2011 record. In fact, 2015 was the first year on record in which the majority of global power-generation capacity.”
Further, “For those who are not invested meaningfully in the sector, lack of information is still the key reason for subdued involvement.” As news of solar power’s potential continues to proliferate, it’s likely investors will increasingly take note.