Despite a series of black eyes from a PR standpoint in recent years, solar energy continues to make huge progress, and is on the cusp of revolutionizing how households and businesses receive their power.
So says reporter Tom Randall in an interesting new article in Bloomberg Business. That revolution will be driven by continued rapid declines in the cost to produce solar energy.
As we've reported before, solar panels can in a sense be considered a digitaltechnology, and thus subject to "Moore's Law" types of improvement cycles, leading to very rapid progress over time. (See Solar Costs Increasingly Competitive, Soon to be More So.)
"The price of solar power will continue to fall, until it becomes the cheapest form of power in a rapidly expanding number of national markets," Randall says.
In fact, Bloomberg New Energy Finance (BNEF) predicts that By 2026, utility-scale solar energy will be competitive with other fuel sources in most areas in the world. The lifetime cost of a photovoltaic solar-power plant will drop by almost half over the next 25 years, even as the prices of fossil fuels creep higher, changing the relative cost dynamics dramatically.
Randall says solar power will eventually get so cheap that it will out-compete new fossil-fuel plants and even start to supplant some existing coal and gas plants, potentially stranding some areas in "a fossil-fuel infrastructure" that will be much higher cost.
As the technology delivers increasing cost advantages for solar, the investment dollars will come pouring in. BNEF estimates that there will be $3.7 trillion in solar investments between now and 2040, with solar representing 33% of new power capacity worldwide.
But the action will hardly be just at electric utilities - business and households will jump on the solar bandwagon as costs decline. High electricity prices from utilities and cheap residential battery storage will make small-scale rooftop solar ever more attractive, driving a 17-fold increase in installations, BNEF predicts.
It estimates that by 2040, rooftop solar will be cheaper than electricity from the grid in every major economy, and almost 13% of electricity worldwide will be generated from small-scale solar systems.
Further, BNEF is not especially bullish on natural gas for electricity production. While the U.S. fracking boom will help bring global natural gas prices down some, BNEF expects that few countries outside the U.S. will replace coal plants with natural gas. Instead, developing countries will often opt for some combination of coal, gas, and renewables.
"Even in the fracking-rich U.S., wind power will be cheaper than building new gas plants by 2023, and utility-scale solar will be cheaper than gas by 2036," Randall says.
Fossil fuels will fall to a 44% share of total electricity generation in 2040, BNEF predicts, down from about two thirds currently, much of which will come from legacy plants that are cheaper to run than shut down.
Meanwhile, developing countries will be responsible for 99% of new coal plants and 86% of new gas-fired plants between now and 2040, as coal as an energy sources virtually disappears in developed economies.
The chart below from BNEF shows the tremendous gains in global electricity production that will occur from 2012 to 2040, with solar's share rising from just 2% to 26% over that time.
Electricity Energy Sources, 2012 versus 2040
Source: Bloomberg New Energy Finance
Even with all that, however, CO2 emissions from the power sector are likely to keep rising through 2029, will remain 13% higher than today's pollution levels in 2040.
"That's not enough to prevent the surface of the Earth from heating more than 2 degrees Celsius," Randall writes, saying additional policy changes will need to be made to drive down greenhouse gas emissions even further.
Do you agree with these predictions for a sea-change in the electricity landscape? Will solar soon begin to dominate? Let us know your thoughts at the Feedback button below.
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