Rajan Wilcox
Solar energy is now often cheaper than fossil fuels, but the comparison is complex. While solar photovoltaic (PV) technology has become the most cost-effective source of new electricity generation in many markets, fossil fuels remain a reliable and readily available energy source. The cost of solar energy has decreased by 80-90% every decade since the 1960s due to technological advancements and economies of scale. In 2024, solar PV was found to be 41% cheaper than the lowest-cost fossil fuel alternatives, such as gas, while onshore wind projects were 53% cheaper. However, the intermittent nature of solar and wind energy presents challenges for energy storage, which can be expensive. Additionally, government subsidies and geopolitical factors influence the cost comparison, with fossil fuel subsidies still prevalent in many G20 nations.
| Characteristics | Values |
|---|---|
| Levelized cost of energy (LCOE) | Solar energy has a lower LCOE than fossil fuels. Solar PV is 41% cheaper on average than the lowest-cost fossil fuel alternatives. |
| Cost of energy production | The operating costs of producing solar energy are lower than those of producing fossil fuels. |
| Cost of energy storage | The cost of battery energy storage systems has declined by 93% since 2010, making renewable energy sources more competitive with fossil fuels. |
| Environmental impact | Solar energy is a more optimal resource than fossil fuels in terms of environmental impact. |
| Reliability | Fossil fuels offer more reliable and constant availability compared to solar energy, which depends on intermittent factors such as wind and sunshine. |
| Government subsidies | Fossil fuels benefit from significant government subsidies, with the G20 spending $452 billion annually to subsidize them, which can impact the cost comparison. |
| Raw material procurement | Geopolitical tensions, trade tariffs, and bottlenecks in raw material production can impact the costs of renewable energy technologies. |
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What You'll Learn
- Solar energy is cheaper than fossil fuels when it comes to building new power plants
- The cost of solar energy per kilowatt-hour is lower than coal or gas power
- Fossil fuels are reliable and readily available, but solar energy is cheaper to produce
- Solar energy is the fastest-growing source of new jobs in electricity generation
- Fossil fuels are subsidised by governments, making solar energy more expensive in comparison
Solar energy is cheaper than fossil fuels when it comes to building new power plants
The benefits of solar energy over fossil fuels are twofold. Firstly, solar energy is a renewable resource that does not produce the same level of pollution as fossil fuels. Secondly, the operating costs of solar energy are much lower than those of fossil fuels. Solar panels can be easily installed on rooftops or ground mounts, harnessing the readily available resource of sunlight. In contrast, fossil fuel production requires the degradation of the earth and has high operating costs.
The case for solar energy is further strengthened by the declining costs of battery energy storage systems, which have decreased by 93% since 2010. This makes solar energy even more competitive with fossil fuels, as it addresses the issue of intermittency. With energy storage, solar energy can be stored when it is plentiful and used when it is not, providing a more stable and reliable source of energy.
While some argue that the grid complexity and backup power requirements of solar energy drive up costs, these considerations do not account for the environmental damage caused by fossil fuels. When the total cost of running a system that emits CO2 is taken into account, solar energy is the more economical choice.
In conclusion, solar energy is indeed cheaper than fossil fuels when it comes to building new power plants. The combination of falling costs, renewable resources, low operating costs, and energy storage solutions makes solar energy a compelling and cost-effective alternative to fossil fuels.
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The cost of solar energy per kilowatt-hour is lower than coal or gas power
The cost of solar energy per kilowatt-hour is indeed lower than coal or gas power. Solar photovoltaic (PV) technology has emerged as the most cost-effective source of new electricity generation. Over the past five years, solar PV has become significantly more affordable than new coal and gas plants in major markets such as China, the US, India, and Germany. The levelized cost of electricity for solar is now 1.5 to 2.5 times lower than gas and 2 to 3 times cheaper than coal.
Solar PV technology has seen tremendous advancements, with costs plummeting by 80-90% every decade since the 1960s. This has been driven by technological innovations and economies of scale. The cost of battery energy storage systems has also declined by 93% since 2010, making solar energy even more attractive.
Solar energy is easily installed on rooftops or ground mounts, harnessing the freely available resource of sunlight. In contrast, fossil fuel production requires the degradation of the earth and has significant environmental costs that are not reflected in their pricing. These externalities, such as pollution and the depletion of scarce resources, are ultimately borne by society.
While existing fossil fuel plants may have lower operating costs in the short term, especially with persistently low natural gas prices, renewable energy sources like solar are rapidly closing the gap. The majority of newly commissioned renewable energy projects are more cost-effective than most fossil fuel alternatives. Solar PV, in particular, was found to be 41% cheaper on average than the lowest-cost fossil fuel options.
As we continue to transition to renewable energy, solar power is expected to play a pivotal role in driving down energy costs and fostering sustainable development.
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Fossil fuels are reliable and readily available, but solar energy is cheaper to produce
Fossil fuels are currently the predominant resource powering most of the planet, while renewable resources like solar energy contribute only a small percentage of global energy capacity. Fossil fuels, such as coal and natural gas, offer the benefit of reliability and near-constant availability. For example, if you want to drive a car, all you need is a full tank of gas. However, the production of fossil fuels has significant drawbacks, including pollution and the reality that they are scarce resources that will eventually run out.
On the other hand, solar energy has emerged as a viable alternative, offering a more optimal environmental impact. Solar power is easily installed on rooftops or ground mounts and harnesses the readily available resource of sunlight. While the costs of solar energy have historically been higher, recent technological advancements and economies of scale have driven down prices. Solar photovoltaic (PV) technology, in particular, has become significantly cheaper than new coal and gas plants in key markets such as China, the US, India, and Germany.
The avoided fossil fuel costs in 2024 reached up to $467 billion globally, and new renewable power is outcompeting fossil fuels on cost. Solar PV is expected to dominate the global energy mix, reaching 50% of global electricity generation by 2050. However, it is important to note that the costs of energy storage for solar power can be high, and running an electric grid entirely on solar power can be more complicated than using fossil fuels.
In summary, while fossil fuels offer the advantage of reliability and availability, solar energy has become increasingly cost-competitive. The levelized cost of electricity for solar is now 1.5 to 2.5 times lower than gas and 2 to 3 times cheaper than coal. As a result, solar energy is poised to play a crucial role in driving economic growth, fostering sustainable development, and offering a clear path to affordable, secure, and clean energy.
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Solar energy is the fastest-growing source of new jobs in electricity generation
Solar energy is now a competitive source of energy, with prices dropping to levels that can compete with fossil fuels. This has led to a rapid increase in solar energy adoption, which has, in turn, created a growing number of jobs in the solar energy sector.
The International Labour Organization (ILO) reported that there were 12.7 million renewable energy jobs globally in 2024, with solar energy being the fastest-growing sector. In 2021, solar energy provided 4.3 million jobs, accounting for more than a third of the renewable energy workforce.
The United States has seen a massive growth in solar energy since 2000, with 248 gigawatts of solar capacity installed nationwide, enough to power over 41 million homes. This growth has been driven by strong federal policies, such as the solar Investment Tax Credit (ITC), residential solar tax credits, and increasing demand for clean electricity.
China is the largest manufacturer and installer of solar photovoltaic (PV) panels, accounting for 42% of the global total. India has also made significant strides, adding more than 10 gigawatts of solar PV, although it still relies heavily on imported panels. Southeast Asian countries are also becoming major solar PV manufacturing hubs, while Brazil is adding many jobs in solar PV installations.
The expansion of renewable energy needs to be supported by policies that ensure decent, high-quality, well-paid, and diverse jobs. The International Renewable Energy Agency (IRENA) is leading the way in this regard, promoting the widespread adoption of renewables and supporting countries in their transition to a sustainable energy future.
In summary, solar energy is the fastest-growing source of new jobs in electricity generation due to its increasing competitiveness with fossil fuels, strong government policies, and rising global demand for renewable energy sources.
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Fossil fuels are subsidised by governments, making solar energy more expensive in comparison
Fossil fuels are a non-renewable source of energy, and their production and use contribute significantly to climate change and pollution. Despite this, they are often subsidised by governments, which can make them appear cheaper than solar energy.
Fossil fuel subsidies are defined as "any government action that lowers the cost of fossil fuel energy production, raises the price received by energy producers, or lowers the price paid by energy consumers". These subsidies are intended to protect consumers by keeping prices low, but they come at a high cost. The fiscal cost of government support for fossil fuels was 1.1 trillion USD in 2023, with most (90%) of this related to the consumption of fossil fuels. The International Monetary Fund (IMF) estimates that globally, fossil fuel subsidies were $7 trillion or 7.1% of global GDP in 2022, a $2 trillion increase since 2020. This increase is due to government support and surging energy prices.
The use of subsidies to support fossil fuel industries makes solar energy relatively more expensive in comparison. This is because solar energy does not receive the same level of government support, and the cost of producing solar energy is higher than that of fossil fuels. According to Lazard's annual report on electricity generation costs, renewable energy does not need subsidies to compete with fossil fuels when building new power plants. However, the report also notes that persistently low natural gas prices and rising renewable energy costs have made existing gas plants more economically attractive than renewables.
The production and use of fossil fuels contribute significantly to climate change and pollution, and governments have agreed to phase out fossil fuel subsidies. For example, the EU's 8th Environment Action Programme calls for a phase-out of fossil fuel subsidies without delay, and the G20 countries committed to "rationalize and phase out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption" in 2009. Despite these agreements, progress towards phasing out fossil fuel subsidies has been slow, and many countries continue to subsidise fossil fuels. This lack of action can be attributed to the potential for social unrest when energy prices increase, as well as a lack of public support for subsidy reform due to a lack of trust in the government's ability to compensate those who need it most.
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Frequently asked questions
Solar energy is cheaper than fossil fuels. Solar PV is 41% cheaper than the lowest-cost fossil fuel alternatives, such as gas, and is 2-3 times cheaper than coal.
The operating costs of solar energy are lower than those of fossil fuels. Solar is easily installed on rooftops or ground mounts, harnessing an already-available resource (sunlight). In contrast, fossil fuel production requires the degradation of the earth.
Solar energy is intermittent, unlike fossil fuels, which are constantly available. Thus, if solar energy were to provide most or all of our electricity, we would need to invest in energy storage, which is expensive.
