If you’re just starting to explore the solar industry, or even if you’ve long been a proponent of renewable energy, you’ll find this discussion on solar levelized cost of electricity (LCOE) enlightening and informative. For a bit of context, LCOE represents the average total cost of building and running a power-producing facility over its assumed lifetime, divided by total energy output.
Recently, Lazard, a preeminent financial advisory firm, released its yearly report on LCOE, giving us significant insights into the cost-efficiency of different sources of energy generation. The findings were quite illuminating for solar advocates. According to the report, onshore wind and utility-scale solar emerge with the lowest LCOE by a considerable margin.
One key takeaway from the report is the fact that utility-scale solar and onshore wind outstrip other new-build electricity generation sources in terms of cost. Here, onshore wind had a LCOE in the range of $27 to $73 per MWh, while utility-scale solar wasn’t far behind, ranging between $29 to $92 per MWh.
Let’s put this in perspective: if you’re contemplating going solar and are researching solar companies to install solar panels for your home, these statistics are profoundly encouraging. Over the years, utility-scale solar has undergone an impressive 83% cost reduction. Compare this to 2009, when solar generation boasted an LCOE of over $350 per MWh.
This tells us that a solar array for a home has become significantly more economically viable, and solar companies are increasingly well-positioned to deliver greater value to homeowners. To draw a vivid comparison, these solar costs are far lower than those of coal, the least expensive fossil fuel, whose LCOE ranges between $69 and $169 per MWh.
An interesting part of the LCOE conversation, particularly for homeowners considering solar panels for their home, is how distributed solar projects measure up. Their costs too have shown a downward trend. However, you’ll find that residential solar, with its LCOE in the range of $122 to $284 per MWh, often comes across as a pricier choice.
Nonetheless, cost considerations don’t stop at LCOE. Solar companies will tell you that home solar arrays drastically reduce the need for expensive long-distance transmission infrastructure. Besides that, solar panels for your home bring significant environmental benefits that aren’t factored into the LCOE equation but indeed add value to your investment.
After examining the Inflation Reduction Act impacts, it appears that energy storage also stands to gain in terms of cost-effectiveness. A utility-scale, 100 MW, 4-hour storage system’s LCOS has been projected to reduce significantly.
In conclusion, the solar industry is demonstrating exciting progress when it comes to cost efficiency. Not only is a solar array for home becoming increasingly affordable, but the wider benefits of solar energy, beyond the financial, are also undeniable. It’s a vibrant time for homeowners and solar companies alike as we journey towards a more sustainable future driven by solar power.
Original Articlehttps://pv-magazine-usa.com/2024/06/11/cheapest-source-of-fossil-fuel-generation-is-double-the-cost-of-utility-scale-solar/
