Unsubsidized Big Solar Competes With Natural Gas by 2025

While many fear that cheap natural gas will constrain growth of the renewable energy industry, that may not be the case according to Lux Research, at least for solar.

By 2025, they say, unsubsidized utility-scale solar electricity will be cost-competitive with gas – widely around the world. It  could happen as soon as 2020, depending on what happens with gas prices.

Analyzing 10 regions around the world, Lux finds that unsubsidized utility-scale solar plants will produce electricity within $0.02 per kilowatt hour of natural gas by 2025 at the latest.

How? It will cost almost 40% less for utility-scale solar by then, accompanied by policy barriers that prevent expansion of natural gas fracking.      

Solar Price Competes with Gas by 2025

Solar system prices fall to $1.20 per watt: While electricity price from natural gas is driven by cost of fuel, price of solar power is driven by system capex. Utility-scale thin film leads the pack with installed system prices that fall from $1.96 per watt in 2013 to $1.20 per watt in 2030, primarily due to increasing module efficiencies.

The transition to unsubsidized utility-scale solar could be turbulent, they say, because the solar industry won’t quite be ready to go it alone when subsidies start expiring in the US, China and Japan. Companies will need to diversify geographically to areas with fewer gas resources – or develop hybrid systems that take advantage of low gas prices.

Before then, more gas production will actually benefit solar because combining the two in hybrid plants can accelerate solar adoption. "Solar integrated with natural gas can lower costs and provide stable output," explains Ed Cahill, lead author of Lux’s report, "Cheap Natural Gas: Fracturing Dreams of a Solar Future." 

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Comments on “Unsubsidized Big Solar Competes With Natural Gas by 2025”

  1. Sean T

    and what happens if one eliminates the more than $6B a year in subsidies that go to natural gas industry? how much does that impact this timeline?


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