Home grown UK solar to be cheaper than gas according to new industry analysis

The Solar Trade Association (STA) have today published new analysis showing that the cost of generating electricity from a typical 10MW solar farm in the UK is set to fall faster than many think over the next 15 years. The report, Cost reduction potential of large-scale solar PV [1], is based on a survey of the trade association’s member companies and their cost forecasts between now and 2030.

It finds that as long as the Government provides stable policy support, it will be cheaper to generate electricity from solar than by burning gas as soon as 2018 – just four years from now.

Solar Trade logoPaul Barwell, CEO of the Solar Trade Association said:

“A lot of people still don’t realise just how close solar is to being competitive with gas-fired power generation. UK solar is on its way to becoming subsidy-free, but it is critical we maintain stable Government policy that supports grid connected utility-scale solar as opposed to fossil fuel power stations.”

In addition, the study shows that solar will be cheaper than the wholesale price of electricity at some point between 2025 and 2028. The cost of generating electricity from gas, on the other hand, is forecast to increase in real terms over the next 15 years, and will always be more expensive than wholesale power. This is illustrated by the graph below.

The results show that the cost of building a large-scale solar farm is set to go down faster than currently estimated by the Government. This is thanks to a growing solar supply chain here in Britain, as well as falling global prices for solar panels and inverters – the equipment that changes the electricity produced by panels into the kind of power used by the grid.

This research follows a recent report from the Centre for Economics and Business Research (Cebr) [2] about the macroeconomic benefits for the UK of investment in solar, which showed that the UK could provide enough electricity to supply 15% of UK electricity demand by 2030, supporting almost 50,000 jobs. Big solar arrays alone could add more than £25 billion to UK economic output.

The global solar market is forecast to be worth over £78bn ($134bn) by 2020, making it a key emerging technology market. TheInternational Energy Agency [3], Fraunhofer [4], McKinsey [5], Deutsche Bank [6], Bloomberg [7] and UBS [8] have all said how solar has the potential to transform our energy supply.

However the Government recently announced that it was going to close the current Renewables Obligation subsidy scheme for solar farms over 5 MW (about 25 acres), which will slow the falling cost of generating solar electricity on a big scale.

Paul Barwell continued:

“It is clear that it makes political and economic sense for the Government to back large-scale solar, with the sector’s track record in creating jobs, and producing ever cheaper zero carbon power. This report makes that case even more strongly – our updated costs forecast shows that solar is even cheaper than thought. We just need one final push from Government to get solar to being subsidy-free. A home grown solution to Britain’s energy crisis.”

“It is in the interests of both energy bill payers and the planet to maintain stable support for good quality large-scale solar farms. If we invest now – and make sure the new Contracts for Difference support scheme works for solar – this technology could in ten years’ time be bringing down energy bills.”

 

1. The Solar Trade Association: ‘Cost reduction potential of large-scale solar PV’, November 2014 is available at STA

2. ‘Solar powered growth in the UK’, September 2014, is available at CEBR

3. International Energy Agency, ‘Medium-Term Renewable Energy Market Report’ is at IEA

4. Fraunhofer Institut, ‘Levelized Cost of Electricity Renewable Energy Technologies’ is at Fraunhofer

5. McKinsey, ‘Solar Power: Darkest Before Dawn’ is at McKinsey

6. Deutsche Bank, ‘Solar: 2014 Outlook’ can be found at DB

7. Bloomberg, 2030 Market Outlook can be found at Bloomberg 

8. UBS, ‘Briefing paper for clients’, August 2014 is at UBS 

 

 

 

 

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