A bright future for solar energy on the way

In less than ten years, the price of solar energy has fallen below that of 'coal energy'. At least that is the expectation for some continents. As technology evolves at a rapid pace, costs are falling while capacity is increasing.

Many different countries worldwide broke records for the cost level of solar energy in 2016. Costs of 3 cents per kilowatt hour are less than half the cost of energy from coal. Costs are expected to decrease further in 2017 due to new energy auctions and tenders. European companies are spreading around the world as subsidy schemes on the continent dwindle.

The cost of solar energy has fallen 62 percent since 2009. Every part of the industry has cut costs. The result is lower risk premiums on bank loans and higher production capacity, which reached a record in 2016. Bloomberg New Energy Finance expected that is why the price of solar energy worldwide will fall below that of coal by 2025. Every time you double the capacity, the price drops by 20 percent.

What is helping is the improvement of the technology behind solar energy. For example, solar cells have been greatly improved in quality due to new production technology. As a result, the sun's rays are converted into energy more efficiently. The innovation-driven solar sector also has a big plus on top of the traditional fossil energy sector. Jenny Chase, chief of analysis at New Finance Energy, expects a 1 megawatt installation to cost 2025 cents per watt by 73. That is now $1,14. A drop of 36 percent. The International Renewable Energy Agency expects prices to fall from 43 to 65 percent for solar costs by 2025, an 84 percent drop since 2009.

How quickly and by how much the price of solar energy decreases differs per country. Countries in Europe pay a 'carbon tax' on the coal they import, making solar energy much more competitive. This is expected to happen in 2020 or earlier. Countries with huge coal reserves, such as Canada and India, have a much higher cost of solar energy. For China, the largest solar energy market in the world, costs are not expected to fall below the price level of coal until 2030. The country now has more hectares of solar panels than Germany. The distribution of solar power in the country, between regions with much and little sun, is a particular problem.

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