The International Renewable Energy Agency (IRENA) published a new report today (June 15) The Power to Change: Solar and Wind Cost Reduction Potential to 2025 showing that the cost of solar photovoltaics (PVs) will continue to plummet over the next decade—falling another 60 percent. That’s on top of the 80 percent drop in solar panel costs since 2009!
The report found that with every doubling of installed capacity, solar PV module prices drop 20 percent and the cost of electricity from wind farms drops 12 percent. It attributed the price drops to economies of scale and technology improvements.
“Historically, cost has been cited as one of the primary barriers to switching from fossil-based energy sources to renewable energy sources, but the narrative has now changed,” contended IRENA’s Director-General Adnan Z. Amin.
“We have already seen dramatic cost decreases in solar and wind in recent years and this report shows that prices will continue to drop. Given that solar and wind are already the cheapest source of new generation capacity in many markets around the world, this further cost reduction will broaden that trend and strengthen the compelling business case to switch from fossil fuels to renewables,” Amin said.
The new IRENA report nips at the heels of the recent Bloomberg New Energy Finance (BNEF) report “New Energy Outlook 2016,” which anticipated a 60 percent drop in solar power system costs, but by 2040. IRENA’s report assumes an even more aggressive drop in the price of solar panels, but it asserted that the price drops would be dependent on the right regulatory and policy frameworks.
The majority of price drops in PV will increasingly come from balance of system costs including inverters, racking and mounting systems, civil works, etc.) as well as technology innovations, operations and maintenance costs and quality project management, according to IRENA. Hence policy and regulations can have a larger impact on reducing costs than just reducing the cost of the solar panels themselves.
“To continue driving the energy transition, we must now shift policy focus to support areas that will result in even greater cost declines and thus maximize the tremendous economic opportunity at hand,” Amin explained.
Looking more broadly at renewables, the report found that other renewable energy technologies can also see significant price drops in the next decade. Costs for concentrated solar power like the Abengoa plant in California could fall 43 percent, according to the report. Meanwhile costs for offshore wind could fall 35 percent and 26 percent for onshore wind, IRENA reported.
IRENA stated that this is the first of several solar publications it will release this year. Earlier this spring it released a new report showing that the renewables industry now supports 8.1 million jobs around the world.Tweet