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Solar energy has been making serious gains in recent years. Increased awareness of the environmental effect of fossil fuels, improvements in solar technology, rising investments and more widespread adoption have all led to a drop in the price of solar energy. Now for the first time, solar is en route to becoming the cheapest source of power available.
According to a report by the World Economic Forum (WEF), solar energy is now cheaper than or the same price as fossil fuels in more than 30 countries. WEF also estimated that, within only a few years, two-thirds of countries will reach the same point.
In 2016, the U.S. added about 9.5 gigawatts (GW) of solar power to the grid, making solar the biggest source of added capacity that year. The year 2016 was the first that solar became the power source with the most additions. The number is even higher — 11.2 GW — when including solar installed for homes and businesses, as opposed to only utilities. Countries around the world from Chile to Saudi Arabia to China are adding solar capacity at record paces and energy companies are bidding on solar contracts in auctions at unprecedented lows.
Ten years ago, generating solar energy cost about $600 per megawatt-hour (MWh) compared to around $100 for coal and natural gas. Today, solar costs about $100 per MWh. The price is expected to keep dropping. By 2025, solar will likely be cheaper than coal across the globe. Solar may be getting cheaper for a number of reasons.
Improvements in technology have made energy from the sun much cheaper to produce. Today, less than half of solar costs come from producing the actual materials, meaning that most of the expenses come from things like installation and connecting to the grid.
Improvements in energy infrastructure, such as installation of smart grids, will likely help make solar more attractive too. An increase in the amount of investment in the solar industry, government subsidies and increased awareness of climate issues are also leading to solar’s increasing popularity.
An unprecedented 16 oil and gas companies went bankrupt this past year, according to a study by accountancy firm Moore Stephens. The report found that this was due to a drop in oil prices from $120 to $50 a barrel, a change many smaller companies were unable to deal with.
The drop is likely due to decreased demand for oil as more consumers are getting their power from renewables. French energy company Engie believes the price may keep falling and even drop to as low as $10.
Of course, fossil fuels are not entirely out of the picture, but the changes bring to light a shift in the energy industry. Renewable energy has become economically viable, even lucrative, and the industry is taking advantage of that development. Many major energy companies that have been in the fossil fuel for years are now investing in renewables, selling off coal plants and decommissioning nuclear facilities.
It’s could be quite beneficial for companies that have long worked with fossil fuel companies to start collaborating with renewable energy producers as well. For example, the strategic use of fabricated metals for safety issues on oil and gas drilling sites led to a large market for those materials in the fossil fuel industry. Manufacturers could tap into a similar market in the renewables sector. Some are calling on governments, as well, to offer help to workers displaced by a shift toward renewable energy.
Despite all of this growth, investments may not yet be high enough to stop negative effects from climate change. The Paris climate change accord set a goal of $1 trillion for global investments in renewables. Investment today is at 25 percent of that goal.
The research says that solar will likely continue on its way to becoming the world’s cheapest source of energy. How exactly that will affect the economy, the environment and workers remains to be seen.
Kayla Matthews writes and blogs about healthy living and has an especially strong passion for helping others increase their mental health and happiness by improving their daily productivity and positivity. To learn more about Kayla, you can follow her on Google+, Facebook and Twitter and check out her most recent posts on Productivity Theory. Read all of her MOTHER EARTH NEWS posts here.
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