There has been positive decrease in the cost of producing solar electricity. Based on press release from the New Energy Finance, the Levelised energy cost has dropped by 50 % from last year. This makes solar electricity a more competitive source of renewable energy.
The radical decrease in cost is the so-called levelised energy cost. This is the cost of generating energy over the lifetime of a solar panel or plant. This includes its initial cost, maintenances and operation cost. In other words, it determines the break-even level. The amount of electricity required to earn revenue from producing electricity with solar panels.
The levelised energy cost has fallen drastically to an astounding figure of $160 per MW (megawatt) hour. This encouraging diminish in outlay required to support and to invest in solar electricity has made the sun even more attractive as an alternative source of energy.
The reduction in 2009 to $160 was mainly an outcome based on installing solar-panel where intense sun was present such as desert. It was also enforced with new and cheaper raw materials, thin-film solar panels. The cost of producing a solar energy with thin films is around $3 per watt, as proclaimed by New Energy Finance.
However, the levelised energy cost, is highly above $160 for solar electricity produced in less sunny areas. The crystalline silicon must be used to create the solar panels and this will immediately double the cost through increase in capital investments.
Moreover, levelised cost is also declining for other renewable electric sources such as geothermal and wind. They have experienced a fall of 10 percent from 2008 to 2009. This excludes government subsidies and incentives offered to small and large-scale investment in renewable energy.
The price of solar photovoltaics (PV) has plunged enormously through 2009. This has opened new prospects for the market and although some governments are reducing subsidies due to economic climate, the demand for photovoltaics remain rising. In Europe, the major markets experiencing the augmentation are Germany, Italy and Spain while Japan as well as America are keeping up with the pace. India and China are also having immense solar projects. India is planning to generate 20GW of energy from the sun by 2020 while China has a $3 billion ‘golden sun’ project.
However, solar energy remains slightly more expensive than other sources such as natural gas and coal. Governments across the world are breaching this very gap with their renewable plans and subsidies provided. To understand the real differences, levelized cost of producing electricity with the use of fossil fuel power plants is as low as from $50 to approximately $100 per megawatt hour. Yet, this cost neglects the damage done to the environment.
How long will it take until the consumers benefit? The more interesting question for consumers of electricity is how the cost reduction of photovoltaics will affect the electricity price. The results are highly subjective based on government intervention. Some consumers will supply electricity to their dwelling through solar energy system meaning that they will directly benefit. Those who are solely dependent on their utility bill will not experience a reduction in their electricity bill but will probably be withheld from increase in price.
Consumers are not going to enjoy the fall. The plummet of the levelised cost of solar panel is a necessary factor to constantly attract new investments in renewable sources of energy.
During the recent year a 30 to 50 percent, reduction in prices of solar photovoltaics has been an outcome of improvement in technology. Governments have supported the step, and Germany has had solar power projects as the top market of the year. The supply of solar energy in Germany can be as high as 3 GW(gigawatts) at the turn of 2009.
The prominence and growing demand for photovoltaics (PV) is likely to continue. There is thus a potential for even more reductions in the levelised energy cost of using solar power.
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