The ultimate truth is ‘climate change’ has been causing severe adverse effects on the environment in the form of natural calamities like – Wildfires, heat waves, heavy rains, etc.
And the major villain here where every conclusion has been pointed is the rise in Global temperature, which is in turn backed by man-made carbon-boosting activities.
Switch to Renewable Energy sources for our energy needs, as the Energy sector is the topper in contributing towards global warming.
Simply said, however, it’ll not be an obvious choice until it beats the unit economics of its counterpart such as coal-based thermal power plants, nuclear power plants, etc.
Let us understand more about ‘How Renewable Energy got so cheap?’, and eventually it is becoming a choice of the decade from environmental and financial perspectives.
Essentially, this change is driven by the fact that renewable energy technologies follow learning curves, which means that their price declines by the same fraction with every doubling of cumulative installed capacity. As fossil fuels don't follow learning curves, the price difference between fossil fuels and renewables will only grow over time.
If you want to switch to renewable energy, what matters is the price relative to fossil fuels. The top graph is the same as the previous one, but it also includes the price of electricity from renewable sources.
All these prices – renewable energy and fossil fuels – are without subsidies.
Look at the changes in solar and wind energy in recent years. Just ten years ago, that was nowhere near possible. Building new power plants burning fossil fuels was much cheaper than building new photovoltaic (PV) or wind turbines. The wind was 22% higher than coal and solar was 223% higher.
But that has completely changed in the last few years.
In 2009, the cost of commercial-scale solar power was $359 per MWh. In just 10 years, prices have fallen 89% and relative prices have reversed. The price of electricity you need to charge to break even with your average new coal plant is currently much higher than what your customers are offering. Build a wind or solar system.
The rare results of such sharp price movements cannot be overstated. Imagine if the price of another commodity fell as fast as renewable power. For example, let's say you find a great place to live in 2009 and think it's worth paying $3590 for rent. If house prices had fallen like solar, he would have paid only $400 for the same location by 2019.
Emphasized that which type of power plant is built depends on relative prices. Has the recent decline in renewable energy prices influenced the decisions of power plant builders? Yes. As you can see in Energy Explorer, both wind and solar energy have expanded rapidly in recent years. In 2019, renewable energy accounted for 72% of new capacity expansion globally
How is that? Why are the costs of renewable energy declining so rapidly?
The costs of fossil fuels and nuclear power are driven primarily by two factors. These are the price of the fuel they burn and the operating cost of the power plant. Renewable power plants are different. Pay per fuel. Their fuel doesn't have to be dug up from the ground, their fuel – wind and sunlight – comes to them. It is the cost of the power plant, and the cost of the technology itself, that drives the cost of renewable energy. It is necessary to understand. Let's rewind a little bit.
The first price of viable solar technology is his 1956. At the time, 1 watt of solar power cost $1,865 (adjusted for inflation and the 2019 prices). Today, a single solar panel, such as the one that homeowners put on their roofs, produces about 320 watts of power. Million Dollar Single Panel – Solar was clearly not competitive with fossil fuels.
So why didn't the story of solar technology end there?
There are two reasons why solar power has survived and become the cheapest source of electricity in the world.
Solar technology was also used at a very high price. It is truly a technology born from outer space. The first practical use of solar energy was to power the satellite Vanguard I satellite in 1958.
It was in this tech niche that someone was willing to pay for solar technology, even at this very high price. has fallen in price. More production has given us the opportunity to learn how to improve our production processes. Initial demand in the high-tech sector led to the production of solar technology, and this initial production started a virtuous cycle of increasing demand and falling prices.
The visualization shows this mechanism. To meet increasing demand, more solar panels are used, leading to lower prices. With these low prices, the technology is becoming cheaper in new applications, which means demand is increasing. It's in a feedback loop.
Due to falling prices, technology has been brought to our planet from outer space. The first terrestrial applications in the 1970s were remote locations where it was costly to connect to the wider grid, such as lighthouses, remote railroad crossings, or vaccine refrigeration. to state then solar technology.
At the time, the price of a solar module was US$106 per watt, adjusted for inflation. As you can see from the bottom axis, the world's installed solar PV capacity was just 0.3 megawatts. Already 94% cheaper than in 1956, photovoltaics were still very expensive and therefore very small compared to world energy demand. An output of 0.3 megawatts is enough to power about 20 people a year.
The time series in the graph shows how the price of solar modules has changed from then to now. The so-called “learning effect” in photovoltaic technology is very powerful. While installed capacity has increased exponentially, the price of solar modules has fallen exponentially. The fact that both metrics changed exponentially is easy to see in this graph, as both axes are logarithmic. On a logarithmic axis, exponentially decreasing measures follow a straight line.
Solar panels can have a steep learning curve, but solar panels themselves aren't what we want—we want the electricity they produce. Is the price of solar power following a learning curve?
The visualization shows relevant data. The vertical axis again shows the cost of generating electricity, while the horizontal axis shows the cumulative installed capacity. Similar to the solar module diagram, both variables are plotted on a graph line representing the learning rate of these technologies on a logarithmic scale.
The bright orange colour shows how the price of solar power has changed over the past ten years. The learning curve relationship we saw for solar panel prices also applies to electricity prices. The learning rate was even faster: for every doubling of installed solar capacity, the price of solar power dropped by 36%. This is compared to 20% for solar panels.
Similarly, wind power (shown in blue) follows a learning curve. There was a 23% learning rate in the onshore wind industry. The price dropped by almost a quarter for every doubling in capacity.
Offshore wind has a learning rate of 10% but is still relatively expensive. Only 25% cheaper than nuclear and slightly more expensive than coal. However, experts expect offshore wind power to become very cheap in the next few years. The reason for this is the increasing size of wind turbines and the fact that the constant wind blowing at sea increases the load factor. Effects in one industry can be transferred to other industries.
WAAREE RTL (WRTL) is Waaree Energies’ EPC arm which is also a listed company in India. It has an experience of more than 600MWp of Solar power plant installations across several countries including projects like ‘50MW in 100 Days – Vietnam’, while embarking on a successful competence in Ground mounted, Rooftop and Floating Solar power projects. WRTL has helped numerous clients with their transition to clean energy and helped reduce their carbon footprint with SOLAR POWER. Step on to your cleaner journey by contacting us at 18002121321 or mail us at waaree@waaree.com
