Future 2040 Solar Will Be Five Times Cheaper Than Fossil Fuel Electricity

The best predictions of the solar energy cost and solar energy adoption have come from Ramez Naam. There have been hundreds of forecasts of the future costs of solar power and the projected share solar power would have in the future. Ramez has been an optimist around solar energy and solar energy development but actual development has even exceeded his previous forecasts in 2011 and 2015.

Energy Storage is Needed to Add to Solar for a Large Scale Energy Transition

This potential low cost of solar energy will need to be marked up to account for the needed large scale battery. Battery prices will also drop a lot. I believe Tesla and CATL and others will be able to drop prices down to $30-50 per kwh 2025-2030. I foresee the Tesla battery day goals to get achieved in 2030. Batteries of some form will get to $10/kwh in 2030-2040.

Previous Nextbigfuture articles covered the future of energy storage. Solar energy at one-fifth the cost would end up around half the price of fossil fuel when very cheap battery storage is included to actually compare more apples to apples with baseload storage.

The actual cost of solar-battery depends upon the percentage of energy that is used in a particular area. MIT has some analysis. It boils down to the higher percentage of renewable and battery usage ends up costing a lot more. This will take longer to go into detail. Getting up to 10% renewables is pretty easy and can be stable. Getting renewables and super-cheap batteries, you can affordably and stably get up around 50% and maybe 60-80%. It would be better to have 20%-40% of reliable baseload with nuclear or hydro.

Ramez Naam’s Case for Projecting Ultra-cheap Solar

Ramez Naam has new forecasts that use something like Wright’s law. Wright’s law has been used by Ark Investments to predict the cost reductions in Tesla electric cars and batteries.

T.P. Wright saw that doubling of scale led to a constant percentage reduction in cost in 1936 while studying the production costs of airplanes. This relationship between cumulative production and cost has been found in other areas like smartphones, computers and other products.

Solar Energy costs have dropped by a factor of 5 since 2010. Utility-scale solar energy is around 4-5 cents per kilowatt-hour. The lowest cost solar project bids are at costs of 1.35 cents per kwh in Abu Dhabi or 1.6 cents per kwh in Portugal. Solar in 2020 is:

– Less than half the price Ramez forecast in 2011.
– Less than a quarter of the price the IEA forecast in 2010.

Wright’s Law applies to the cost of solar modules. The price of solar modules per watt of power drops by somewhere around 25% for every doubling of cumulative manufacturing. Solar modules are about one-third of the cost of solar electricity. The rest comes from related equipment (inverters, trackers, cabling, mounting systems), land, labor, and other non-module costs.

In 2015, Ramez confirmed a very consistent learning rate for electricity produced from utility-scale solar.

At the end of 2019, solar produced just over 2% of global electricity. After two more doublings when 2,400 GW of solar are producing roughly 8% of current electricity demand, solar costs (of the most recently built and operational projects) will have dropped in half from today’s levels.

Cumulative Solar Energy deployment is doubling every 3-4 years. The IEA forecasts doubling every 4.5 years. Even with the IEA estimation, the world should reach 2400 GW of solar in 2027. We should reach 4800 GW of solar by 2032 and 9600 GW of solar in 2036. Global energy demand will grow and electricity will replace fossil fuels in transportation. This will mean a doubling of electricity demand by 2040 just from the electrification of transportation. There will also be a doubling or two from economic growth. The world solar industry is growing installations at about 23-25% each year in 2020-2021.

Natural gas has reached 43% of US electricity production. It was able to displace coal. Coal had a 50% share of US electricity generation and coal is now 24%. It is tougher to displace the last part of different forms of energy because the last ones are the lowest cost, most efficient and strongest operators.

Also, fossil fuels and nuclear are better able to generate direct heat and steam which are needed for industrial applications.

SOURCES- Ramez Naam
Written By Brian Wang, Nextbigfuture.com