Q24N – Advances in technology and growing experience in the manufacture of solar energy systems are contributing to the gradual reduction of their cost, giving them an advantage over other sources of power generation, such as fossil fuel.

A worker cleans the panels in a solar power park run by the Costa Rican Electricity Institute (ICE) on March 26, 2015 in Guanacaste, Costa Rica Joe Raedle/Getty Images

Solar power is now cheaper than coal in some parts of the world. In less than a decade, it’s likely to be the lowest-cost option almost everywhere.

It is estimated that in 2025 an average 1 MW ground mounted solar energy system will have an average cost of US$0.73 cents per watt, compared with US $1.14 now, 36% less than the current cost.

An analysis published by Bloomberg.com states that economies of scale are also contributing to reducing the cost of implementing solar energy systems. “.. The solar supply chain is undergoing a ‘Wal-Mart effect’ of higher volumes and lower margins, according to Sami Khoreibi, founder and CEO of Enviromena Power Systems, a developer from Abu Dhabi. ”

In 2016, countries from Chile to the United Arab Emirates broke records with deals to generate electricity from sunshine for less than US$0.03 cents a kilowatt-hour, half the average global cost of coal power. Now, Saudi Arabia, Jordan and Mexico are planning auctions and tenders for this year, aiming to drop prices even further. Taking advantage: Companies such as Italy’s Enel SpA and Dublin’s Mainstream Renewable Power, who gained experienced in Europe and now seek new markets abroad as subsidies dry up at home.

Since 2009, solar prices are down 62 percent, with every part of the supply chain trimming costs.

“These are game-changing numbers, and it’s becoming normal in more and more markets,” said Adnan Amin, International Renewable Energy Agency ’s director general, an Abu Dhabi-based intergovernmental group. “Every time you double capacity, you reduce the price by 20 percent.”

Bloomberg.com says the speed at which the price of solar will drop below coal varies in each country. Places that import coal or tax polluters with a carbon price, such as Europe and Brazil, will see a crossover in the 2020s, if not before. Countries with large domestic coal reserves such as India and China will probably take longer.

In Costa Rica, almost all of the country’s electricity was produced by renewable energy in 2016. The Instituto Costarricense de Electricidad (ICE) – state power utility – said that around 98.1 per cent of the country’s electricity came from green sources.

These included large hydropower facilities, fed by a myriad of rivers and heavy seasonal rains, geothermal plants, wind turbines, biomass plants and solar panels.

ICE president Carlos Manuel Obregón expects renewable power generation to stay “stable” in Costa Rica in 2017.

But, for Costa Rican clean development adviser Dr. Monica Araya, despite the country’s fantastic achievement, “It hides a paradox, which is that nearly 70 per cent of all our [Costa Rica’s] energy consumption is oil.” The 98.1 per cent figure only refers to electricity usage, not gas used for heating or fuel used in vehicles, for example.

Sources: Grupoice.com, Centralamericandata.com, Bloomberg.com, Independent.co.uk


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