Mercedes Mullins
Solar energy is now the cheapest electricity in history, according to the International Energy Agency's World Energy Outlook 2020. The report outlines a major rise in renewables, with solar power up to 43% cheaper than previously expected. However, comparing the costs of solar energy and fossil fuels is complex due to various factors, such as government subsidies for fossil fuels and the intermittent nature of solar power. Nevertheless, solar energy has rapidly become more cost-competitive with fossil fuels, and its environmental benefits make it a more optimal resource.
| Characteristics | Values |
|---|---|
| Levelized cost of energy (LCOE) | Solar LCOE has decreased by 78% since 2009, or over 25% annually. The lowest-cost coal ($66/MWh) and gas combined cycle ($61/MWh) currently outcompete solar ($72-86/MWh). However, when accounting for future fuel prices, solar becomes more attractive. |
| Environmental impact | Solar power is a more optimal resource than fossil fuels. |
| Reliable application | Fossil fuels offer constant availability and are more reliable than solar energy. |
| Operating costs | The operating costs of producing solar energy are lower than those of producing fossil fuels. |
| Cost trends | The cost of solar energy has decreased over time and is projected to continue doing so. The price of solar energy per kilowatt-hour is lower than that of coal or gas power when averaged over their lifetime. |
| Government subsidies | Government subsidies play a significant role in shaping the growth potential of energy sources. The G20 countries, which account for over 85% of global GDP, spend $452 billion annually subsidizing fossil fuels. |
| Grid complexity | A grid relying solely on solar and wind energy is more complicated and may result in higher electricity costs. |
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What You'll Learn
Solar is the 'cheapest electricity in history'
Solar energy is now the cheapest electricity in history, according to the International Energy Agency's (IEA) World Energy Outlook 2020. The outlook offers four "pathways" to 2040, all of which predict a significant increase in renewables. The IEA's main scenario forecasts a 43% increase in solar output by 2040 compared to its 2018 expectations. This is due to solar power being 20-50% cheaper than previously thought.
The levelized cost of energy (LCOE) for solar has decreased by 78% since 2009, or over 25% annually. While the lowest-cost coal and gas combined cycle can currently outcompete solar, when accounting for future fuel prices, solar becomes more attractive.
Solar energy is also much more environmentally friendly than fossil fuels. However, fossil fuels offer the benefit of being a reliable and constantly available energy source. The intermittent nature of solar and wind power means that they cannot always match the supply and demand of electricity in the moment. As a result, energy storage becomes necessary, and storage is not cheap.
Nevertheless, improvements in solar photovoltaic technology continue to be made, and costs continue to decrease. The cost of solar has dropped by a factor of 5,000 since 1958, and it is predicted that solar energy will continue to become more affordable and accessible.
In conclusion, solar energy is the cheapest electricity in history, and its costs are expected to continue to decrease, making it an attractive and environmentally friendly option for the future.
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Fossil fuels are subsidised by governments
The G20 nations, which account for over 85% of global GDP, spend $452 billion annually to subsidise fossil fuels. The United States is the largest contributor to fossil fuel subsidies globally, even under the environmentally progressive Obama administration. Despite agreeing to phase out fossil fuel subsidies in 2009, not all G20 members have followed through on their commitment.
Fossil fuel subsidies have significant fiscal consequences, leading to higher taxes, increased borrowing, or reduced spending. They also promote inefficient allocation of an economy's resources, hindering growth, and encourage pollution, contributing to climate change and premature deaths from local air pollution. Additionally, these subsidies are not well-targeted at helping the poor, mostly benefiting higher-income households.
Removing fossil fuel subsidies would reduce energy security concerns related to volatile fossil fuel supplies and free up government money for better targeted social spending, reductions in inefficient taxes, and productive investments. However, phase-out is politically challenging due to the potential for social unrest and a lack of public confidence in the government's ability to compensate those in need.
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Fossil fuels are a constant, reliable resource
One of the main advantages of fossil fuels is their constant availability. Whether it's 3 a.m. or 3 p.m., consumers only need to consider whether their gas tank is full. In contrast, solar energy is dependent on the availability of sunlight and may not work as effectively in certain regions, such as the more northern areas of a country.
While solar energy has become an increasingly attractive option due to its low cost and environmental benefits, fossil fuels still have their pros. They are cheap, effective, and reliable. Additionally, natural gas, which is the most widely used energy source in the EU, is the most environmentally friendly fossil fuel when burned under perfect combustion, releasing minimal to no harmful compounds.
However, it is important to note that fossil fuels are non-renewable resources, and if consumption is not reduced, we will run out of them quickly. According to estimates, we have about 47 years left of oil, 52 years of natural gas, and 133 years of coal. The burning of fossil fuels also contributes to global warming and climate change, as they release carbon dioxide and other greenhouse gases into the atmosphere.
While fossil fuels have been a constant and reliable energy source, the world is transitioning towards green energy and renewable alternatives.
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Solar LCOE has decreased 78% since 2009
Solar energy is now the "cheapest electricity in history", according to the International Energy Agency's (IEA) World Energy Outlook 2020. The IEA's outlook offers four "pathways" to 2040, all of which predict a major rise in renewables. By 2040, oil and gas will remain the two largest sources of primary energy, but their use will have declined. Meanwhile, solar and wind energy will have surged to third place, rising nearly sevenfold over the next two decades.
The levelised cost of energy (LCOE) is a measure of the total lifecycle costs of energy production, covering capital costs, operation and maintenance costs, performance, and fuel costs. Solar LCOE has decreased by 78% since 2009, or over 25% annually. This decrease has been driven by favourable US regulations, such as the Inflation Reduction Act (IRA), which has encouraged the development of new solar projects.
In 2021, the LCOE for solar PV ranged from $29-92/MWh, with an average of $58/MWh. By 2025, this range is predicted to tighten to $38-78/MWh. This decrease in LCOE has made solar energy more competitive with fossil fuels in terms of cost. In 2021, solar energy was cheaper than coal and gas in most major countries.
However, it is important to note that the cost of energy is not the only factor that determines its adoption. Government subsidies play a major role in shaping the growth potential of a new power source. For example, the G20 nations, which make up more than 85% of global GDP, spend $452 billion per year subsidizing fossil fuels. In addition, fossil fuels offer the benefit of being a reliable and constantly available resource.
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Solar is a more optimal environmental resource
Solar energy is a more optimal environmental resource than fossil fuels. While fossil fuels offer the benefit of being a reliable and readily available energy source, their production and use come at a significant environmental cost. In contrast, solar energy harnesses the power of the sun, which is an already available and abundant resource.
The environmental impact of solar power is significantly lower than that of fossil fuels. Solar energy does not produce the same level of pollution and carbon dioxide emissions as fossil fuels, which contribute to climate change. Solar is also a more sustainable option as it does not rely on the extraction and burning of finite resources like coal, oil, and natural gas.
The cost of solar energy has decreased dramatically over the years, making it a more economically viable option. The levelized cost of energy (LCOE) for solar has decreased by 78% since 2009, and it is projected to continue decreasing. Solar energy is now the "cheapest electricity in history", according to the International Energy Agency's World Energy Outlook 2020. The outlook predicts a major rise in renewables, with solar output expected to increase by 43% by 2040 compared to their 2018 expectations.
While the intermittent nature of solar energy may require backup sources and energy storage solutions, the overall cost of solar is still competitive with fossil fuels. The price of solar energy per kilowatt-hour is lower than coal or gas power when averaged over their lifetimes. Additionally, the operating costs associated with producing solar energy are much lower than those of fossil fuels, as solar panels can be easily installed on rooftops or ground mounts.
Solar energy is a more environmentally friendly and cost-effective option than fossil fuels. It offers a sustainable and low-cost alternative to traditional energy sources, contributing to a cleaner and more sustainable future.
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Frequently asked questions
Solar energy is now the "cheapest electricity in history", according to the International Energy Agency's World Energy Outlook 2020. Solar photovoltaic technology has seen improvements in design and significant cost reductions.
The levelised cost of energy (LCOE) for solar energy has decreased by 78% since 2009. While solar energy has lower operating costs than fossil fuels, the cost of energy storage can be high. Solar energy is currently cheaper than fossil fuels in most major countries.
Solar power is a much more optimal resource than fossil fuels. Fossil fuels have significant pollution impacts and are a scarce resource that will eventually run out.
Solar energy is dependent on the availability of sunlight and requires energy storage solutions, which can be costly. Fossil fuels offer a more reliable and constant source of energy.
