PV 'competitive' with gas in 2025
Utility-scale PV will be cost-competitive with natural gas in nearly every major region of the world by 2025 even in the absence of a carbon price, and cheaper in some regions, predicts market researcher Lux.
The only places where gas-fired electricity will remain significantly cheaper than utility-scale PV in 2025 will be Russia and Greenland, Lux claims.
In South and Southeast Asia power from utility-scale PV arrays will be significantly cheaper than from combined-cycle gas turbines, while in all other regions globally the two will be within $0.02/kWh of each other.
The claim is based on the “likely scenario” of global gas prices above $7.60/MMBtu in 2025.
PV will reach cost-competitiveness with gas in some particularly sunny regions by the end of this decade, at a gas price of $4.90/MMBtu, Lux says.
Ironically, the rise of gas as a source of electricity globally will help solar achieve a far higher penetration in the world's energy mix, by helping grid operators cope more cheaply with solar's intermittent nature.
“On the macroeconomic level, a ‘golden age of gas’ can be a bridge to a renewable future, as gas will replace coal until solar becomes cost competitive without subsidies,” says Ed Cahill, research associate at Lux.
In addition to the rising price of gas as fracking opens new global markets, the cost-gap will be squeezed by the ever falling price of utility-scale PV, predicted to reach $1.20/W by 2030, compared to $1.96/W today.
Most of that reduction will come from higher-efficiency modules, with thin-film technology still leading the way in the utility-scale segment, welcome news for the likes of First Solar, Solar Frontier and Hanergy.
Lux’s predictions are not all happy for PV, however.
“Turmoil is imminent” in the large-scale PV sector, the researcher predicts, as subsidies in key markets like Japan, China and the US look set to be binned before the technology is completely competitive on its own.
The result will be PV developers and suppliers pivoting towards global regions where gas is scarcer, in addition to boosting their focus on hybrid solar-gas systems.