Solar Power Projected to be Cheaper than Natural Gas in Near Future

Currently, solar energy costs are competitive with natural gas but that may soon change for the better. According to a Forbes article, a new report projects that solar energy will surpass natural gas in cost-efficiency in only a few years. Here’s an excerpt: 

Under power purchase agreements signed this year, developers will deliver power from large utility-scale solar plants will be selling at below the price of electricity from natural gas by 2021, according to a new report from Lawrence Berkeley National Laboratory. Between 2017 and 2040, the lifetime of the solar plants, the average levelized cost of power from these solar plants will come to $42.1 per megawatt hour, wrote Mark Bolinger and Joachim Seel, versus $48.1 for the cost of gas alone.

So what’s that mean? Solar will be cheaper than traditional grid power in at least some locations in a few years, so any utility looking to keep control of pricing will look more and more at solar. And, if you look at the chart below, you can imagine that the crossover point for 2016 and 2017 PPA contracts will occur even closer in time as equipment prices decline.

Granted, the authors qualify their findings. A substantial portion of these power plants are located in the Southwest, gas prices are difficult to predict and some of these plants haven’t fully come online. The industry will also have to deal with economic impacts if federal tax credits vanish. Still, this is the projected pricing for real contracts, and they aren’t even counting in the cost of the natural gas plants, just the fuel…

The report will likely further add to the growing momentum for solar. The total footprint of utility-scale solar in the U.S. is 31 times larger than it was a decade ago, according to GTM Research, and all of the variables are working in the industry’s favor: the technology is improving, costs are going down and utilities are discovering that they can leverage solar in a way that’s good for their balance sheet.

To read the article, click here.