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Solar will be in “unassailable position” as cheapest
source of electricity
Solar levelized cost of electricity will reach $30 per MWh in 2050 as
global capacity grows 22-fold, said DNV.
21 June
2023
By
RYAN KENNEDY
Borrego Solar and storage installation
Image: Greg M. Cooper, Borrego Solar
DNV, a global
risk management firm, offered its annual outlook on the global energy
transition. Solar was placed in the spotlight as the leader in
renewable energy supply.
“In 2050,
solar PV will be in unassailable position as the cheapest source of
new electricity globally,” said DNV.
As the world
transitions toward carbon emissions-free electricity generation, DNV
expects the share in generation mix for coal to decrease 4% and gas to
decrease 8% by mid-century. As the global fossil fuel industry becomes
a metaphorical fossil itself, DNV expects the world energy mix to be
70% reliant on variable renewable sources like solar and wind power.
Fossil fuels will represent just over 10% of the energy mix by that
time.
Along this
path, solar capacity increases 22-fold in DNV’s energy transition
vision. The firm said it views variable renewables as the cheapest and
quickest route to both decarbonization and energy security.
Image: DNV
Costs are
expected to improve by mid-decade. The global weighted average
levelized cost of energy (LCOE) for solar is currently around $50 per
MWh for solar and $120 per MWh for solar-plus-storage. DNV expects
solar LCOE to drop to $30 per MWh by mid-century, with some individual
project costs well under $20 per MWh.
“The main
driver for this reduction in LCOE is the reduction of unit investments
costs, which are around $900 per kW as a global average now. This will
fall significantly with every doubling of solar PV installation
globally, reaching $650 per kW in 2050,” said the report.
(Read: “U.S.
solar deployment to grow 40% this year, remains lowest-cost option“)
Currently, the levelized cost of solar-plus-storage is currently more
than double that of standalone solar. A continuous decline in battery
prices will narrow this gap to around 50% by mid-century, said DNV.
Despite its
higher costs, solar-plus-storage has an advantage in capture price.
Plants with storage can charge their batteries when sunlight is
plentiful during the day and sell the stored electricity when the
price is high. DNV said that by 2038, the capture price advantage of
solar and storage co-located projects will surpass the cost
disadvantage, making these projects even more attractive.
“PV and
storage systems are designed as a ‘package’ that can produce energy on
demand, just like hydropower, nuclear, or combustion power plants,”
said DNV.
In 10 years,
DNV said roughly 20% of solar projects will be built with dedicated
storage, and by mid-century such projects will reach about 50%.
DNV
highlighted the impressive growth ramp of solar globally, which was 1
GW per year in 2004, 10 GW in 2010, and 100 GW in 2019. Despite global
disruptions in supply chains due to COVID-19 and the Russian invasion
of Ukraine, 150 GW was added worldwide in 2021. DNV expects global
annual installations to continue to rise, reaching 550 GW per year.
“By
mid-century, total installed capacity will be 9.5 TW for solar PV and
5 TW for solar and storage. The resulting 14.5 TW of solar capacity is
24 times greater than in 2020,” said DNV. “While solar will have a
share of 54% of installed capacity in mid-century, it will account for
30% of global on-grid electricity generation.”
DNV’s full
energy transition outlook can be found here.
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