Why solar costs will fall another 40% in just two years

It’s been one of the big themes at the World Energy Future Conference here in Abu Dhabi. Solar, and other technologies such as wind power, are no longer more expensive than traditional fossil fuels in many parts of the world. Indeed, they are cheaper.

The big oil and gas players recognise this. Dr Adaba Sultan Ahmed al Jabber, the minister of state of the United Arab Emirates, said at the lavish opening on Monday that the cost of solar was competing with traditional sources of energy, and would not be derailed by the plunge in the oil price.

He saw that as an opportunity to call for the removal of fossil fuel subsidies, which he noted outstripped those of renewables by a factor of 5:1 in 2013. “If we have courage and opportunity to saying yes to thinking differently, could deliver better future,” he told the conference. This from a country which is in the top eight oil producers in the world, and the top seven in gas reserves.

A day earlier, the International Renewable Energy predicted that solar costs would fall substantially in coming years, underlying its competitiveness with fossil fuels. If government policy makers did not understand this, IRENA said, then they risked making bad decisions about their energy future.

Last week, the Saudi Arabian power company ACWE, with some $24 billion in assets, set a world record low for the price of solar in the world’s largest tender. Its CEO, Paddy Padmanathan, toldRenewEconomy in an interview on Monday that the price of solar will fall by at least a third in coming years. He expects at least half of the 140,000GW of power capacity to be installed in the Middle East and north Africa in the coming decade to be solar. Read More…