There has always been a direct correlation between the popularity of solar energy and the viability of its competitors. Every time there is an oil embargo or an energy crisis, the popularity of solar rises, only to diminish when the availability of cheaper fossil fuels returns to normal. This appears to be a trend that will soon come to an end. This year, Bloomberg New Energy Finance (BNEF), which provides some of the most advanced new-energy estimates, said that solar power costs have decreased by approximately 33% in emerging regions since 2010. That solar now beats wind as the most cost-effective renewable energy source in poor countries, but it’s beginning to overtake coal and gas as the most expensive sources as well. Private solar firms bidding on projects in India and Chile came in at half the cost of coal.
Our world will begin to look very different once renewable energy is able to consistently undercut the pricing of fossil fuels.
One of the main reasons that new solar projects are now cheaper to build than wind turbines or even some fossil fuels is the development of more affordable equipment and more efficient processes. After China and a number of emerging economies, such as India, Pakistan, and Egypt, made a determined effort to create renewable energy sources, these breakthroughs are now appearing. By 2020, China alone will have installed more than 110 million KW of solar electricity.
While wealthy economies like the United States and Australia continue to benefit from subsidies, the innovation spurred by the developing world has begun to spread throughout the world’s commercial and residential solar systems. Prices for solar energy in the United States have fallen about 12 percent in the last year, which is consistent with the pattern we have witnessed since 1977. (the cost of solar panels in 2013 was around 100 times cheaper than the cost of solar panels in 1977.) Oxford University expects that costs will continue to fall at a rate of roughly 10% per year.
In the long run, photovoltaic and commercial solar power facilities will be able to outperform their conventional counterparts. Unlike wind power, homeowners can use solar power to power their homes, and as a result, an increasing number of people are taking advantage of this cost-saving opportunity. Australian homeowners save an average of $1,200 in the first year by installing a 5.7kw solar panel system. We may witness a fundamental shift in many economies and the way their energy industries are run if more efficient technologies can achieve the same in typically less sunny places. When wholesale energy prices are disrupted, governments will have to rethink their utility systems and budgets to accommodate a more empowered public.
Nobody knows what the world will look like in 2050. MIT claims that by the middle of this century, up to 75% of the world’s energy will come from solar sources.