ENERGY
Technology Advancements to Lower
SOLAR POWER
Costs Over Long Term Solar power may continue to see declining costs over the long term, resulting from technology advancements as well as a reduction in soft costs that are set to take place over the coming years. BY FITCH SOLUTIONS
T
he cost of solar power has declined significantly over the past decade, with the levelised cost of energy (LCOE) for solar falling from a weighted average of USD248/MWh in 2010 to USD68.4/MWh in 2019. According to financial advisory and asset management firm Lazard, the LCOE for utility-scale solar power reached USD36/MWh in 2021. The steep decline is the result of several factors including a rapid decline in module costs, increased competition and economies of scale from significant growth globally. Notably, soft costs, which include customer acquisition, permitting, financing and installation costs, continue to account for a significant portion of overall project costs. Increasing cost-competitiveness plays a key role in our upbeat long-term solar growth outlook, in which we forecast global solar capacity will increase 144% from 716GW in year-end 2020 to 1 747.5GW in 2030.
Ongoing improvements in solar cell technologies, particularly perovskite solar cells, present the potential for additional significant improvements in conversion efficiencies and sizeable cost declines by the middle to end of the coming decade.
Matt Klug
Key View
Above: Atomic scale view of the perovskite crystal structure forming (self-assembling). The potassium ions (in red) are decorating the surfaces of the structures to heal defects and immobilise the excess halides. Below: Global: Solar capacity, MW and generation, TWh (2020-2030).
LONG-TERM GROWTH OUTLOOK
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IRENA, Fitch Solutions
Improvements to the technology of solar project components will reduce project costs and improve the overall efficiency of solar power projects. Anticipated technology advancements are: More powerful and efficient modules. Solar module manufacturers will continue to make technological advancements towards more powerful and more highly efficient models. The increase in power modules also coincides with improvements in overall proficiency, with manufacturers working towards efficiencies upwards of 23-25%. This in turn will reduce costs throughout the solar project value chain, as using fewer modules will reduce the amount of racking, tracking and balance of system
e/f = Fitch Solutions estimate/forecast.
