New-build solar cheaper still, but short-term blip could be felt in H2 2021 – BloombergNEF

Share on facebook
Share on twitter
Share on linkedin
Share on reddit
Share on email
A PV project in India, where new solar can achieve a levelised cost of US$25/MWh. Image: ReNew Power.

The cost of building and operating new utility-scale PV is now cheaper than running existing coal plants in China, India and across much of Europe. But, rising commodity prices could see PV projects become temporarily more expensive in the second half of 2021, according to BloombergNEF analysis.

With the price of polysilicon tripling since May 2020, the research organisation said it has recorded increases in module prices of 7% in China and 10% in India since the second half of last year.

The rise in commodity prices has not resulted in an increase in BNEF’s global levelised cost of electricity (LCOE) benchmarks for solar just yet, said Seb Henbest, chief economist at BNEF. “But if sustained through the second half of 2021, this rise could mean that new-build renewable power gets temporarily more expensive, for almost the first time in decades.”

Following a hike in spot prices for monocrystalline grade polysilicon, LONGi announced a price increase for its wafers last month, with the manufacturer’s output in China then further disrupted by earthquakes.

According to BNEF, the impact of the commodity price rises should be put in perspective. It said manufacturing, not materials, makes up most of the final costs for modules; supply chains will absorb part of that rise, before it affects developers; and some developers have longer-run purchase orders that may shield them against this rise for some time.

Aside from the supply chain issues, BNEF’s H1 2021 LCOE Update reveals that while it was already cheaper to build and operate PV projects over their lifetime than new coal- and gas-fired power plants for more than two-thirds of the world’s population, now PV has passed a major new milestone to become cheaper than existing coal plants in key markets.

The global average LCOE for utility-scale PV in the first half of 2021 was US$48/MWh, down 5% on the same period last year and an 87% reduction since 2010.

In China, BNEF estimates the cost of building and operating a solar farm is now US$34/MWh, cheaper than the US$35/MWh of operating a typical coal-fired power plant. In India, new solar can achieve a levelised cost of US$25/MWh, compared to an average cost of running existing coal-fired power plants at US$26/MWh.

Europe has seen a 78% reduction in the levelised cost of new-build solar since 2014. The current costs range from US$33/MWh in Spain, US$41/MWh in France and US$50/MWh in Germany – figures far below typical running costs for coal- and gas-fired power plants in the region, which BNEF estimates at above US$70/MWh in 2021.

“The economic incentive to deploy large amounts of solar power just got stronger in India, China and most of Europe. If policymakers can recognise this swiftly, this could prevent the emission of billions of tons of CO2,” said Tifenn Brandily, associate at BNEF.

BNEF’s analysis has been published the same week as a report from the International Renewable Energy Agency that found 62% (162GW) of the total renewable power generation added globally last year had lower costs than the cheapest new fossil fuel option.

Read Next

PV Tech Premium
May 25, 2022
Solar EPC Sterling and Wilson believes an easing of PV module supply concerns, the rise of alternate supply chains and a gigawatt-scale green hydrogen market will drive both short- and medium-term growth for PV developers and EPCs.
May 25, 2022
Module price increases, higher raw material costs and logistical challenges will pull down the return on equity (ROE) for 25GW of India solar projects, with 5GW of those at high risk given when they submitted their bids.
PV Tech Premium
May 24, 2022
PV Tech Premium spoke with the Clean Energy Associates at this month's Intersolar regarding their traceability protocol, what it expects from ongoing legal battles in the US and the problem with European module procurement.
May 23, 2022
Solar investments in China reached RMB29 billion (US$4.4 billion) in the first four months of the year, according to the country's National Energy Administration (NEA).
May 18, 2022
JA Solar has today unveiled its new n-type module (Bycium+ cell), the DeepBlue 4.0 X, whilst committing to a 15GW manufacturing capacity of the product by next year.
May 18, 2022
LONGi Solar is planning to develop a 20GW module assembly facility in Wuhu City, Anhui Province after signing a cooperation agreement with local authorities.

Subscribe to Newsletter

Upcoming Events

Solar Media Events
June 7, 2022
Leonardo Royal London City, London, UK
Solar Media Events
June 14, 2022
Napa, USA
Solar Media Events
June 22, 2022
Sheraton Austin Hotel at the Capitol, Austin, Texas