A report from Ernst & Young (EY) reveals that despite inflationary pressures, solar remains the cheapest source of new-build electricity. The global weighted average levelized cost of electricity (LCOE) for PV is now 29% lower than the cheapest fossil fuel option.
December 8, 2023 Ryan Kennedy
EY stated in its latest energy and resources report that 86%, or 187 GW, of newly commissioned renewable energy sources generated electricity at a cost lower than the average cost of fossil fuel generation in 2022.
Solar is the most affordable new-build electricity in many markets, even amid inflation and cost increases, said EY, noting that the global weighted average LCOE for solar is now 29% lower than the cheapest fossil fuel option. Massive energy storage is also rapidly becoming more cost-competitive and advanced, it said.
Solar has quickly fallen in average LCOE globally, from more than $400/MWh in the early 2010s to about $49/MWh in 2022, down 88%. Wind power LCOE has fallen approximately 60% over the same period.
Image: EY
EY projects that solar and wind will become the global baseload electricity source. By 2030 the two traditional renewables are expected to account for 38% of the energy mix, and by 2050 solar and wind could provide 62% of the energy mix. China, Europe and the United States will drive a 53% increase in solar and wind generation, producing over 57% of global solar and wind output by 2050, said EY.
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“A global solar boom will power over half of this, but adoption will vary across markets. Solar-generated power will become the biggest source of energy in countries such as the United States, and those in Oceania and South Asia, driven by advancements around solar PV modules advancing at rapid rate,” said EY.
These milestones will not be reached without clearing significant barriers to progress, EY said. Particularly in the United States, a backlog of grid connection applications is causing delays, cancellations, and large sustained costs. EY said that the United States has at least 1,350 GW of wind and solar capacity and 680 GW of storage is waiting to be connected, which is enough to double the country’s electricity supply.
In a survey of more than 70,000 global consumers, EY found that sentiment toward residential solar adoption is strong. About 62% of survey participants said they have bought or are considering buying photovoltaic panels, while 50% are considering buying or have already purchased battery storage.
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