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Solar vs Coal: Solar to be CHEAPEST Source of Power in 2025

Jan 06, 2017 10:27 AM EST

Solar power has become cheaper than coal in some parts of the world. And statistics show that in less than a decade, it will be the lowest-cost option almost anywhere in the globe.

According to Bloomberg, in 2016, countries such as Chile to the United Arab Emirates have broken records with deals to generate electricity from sunshine for less than 3-cents a kilowatt-hour. This is half the average global cost of coal power.

Now Saudi Arabia, Jordan and Mexico are also planning auctions and tenders for this year. They are aiming to drop prices even further.

Electrek said companies such as Italy's Enel SpA and Dublin's Mainstream Renewable Power now seek new markets abroad as subsidies dry up at home.

Since 2009, solar prices were down 62 percent, with every part of the supply chain reducing costs. This cut risk premiums on bank loans and pushed manufacturing capacity to record levels. By 2025, solar power may be even cheaper than using coal on average globally, according to Bloomberg New Energy Finance.

Adnan Amin, International Renewable Energy Agency's director general, said the numbers are game-change, and it's becoming more normal in more markets.

The Telegraph notes that better technology is seen as the key to boost the industry. This ranges from the use of diamond-wire saws that more efficiently cut wafers to better cells that provide more spark from the same amount of sunlight. It's also driven by an increased edge in the industry versus fossil fuels, as the solar boom - which started a decade ago - allowed industries to develop.

Now the average 1 MW-plus ground mounted solar system will cost 73 cents a watt by 2025. The supply chain appears to be experiencing a "Wal-Mart effect" from higher volumes and lower margins. The speed at which the price of solar will drop below coal can vary in each country. Places that import coal or tax polluters with a carbon price, such as Europe and Brazil, will see a crossover in the 2020s. 

Although coal industry experts say the cost comparisons involving renewables do not take into account the need to maintain backup supplies that can work when the sun doesn't shine, or when the wind doesn't blow. 

Benjamin Sporton, CEO of the World Coal Association, said all advanced economies demand full-time electricity, and wind and solar can only generate part-time. Regardless, solar's plunge in price is starting to make the technology a potential competitor. 

In China, the biggest solar market, will see costs falling below coal by 2030, according to New Energy Finance.

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