UK government solar LCOE forecasts tumble

Share on facebook
Share on twitter
Share on linkedin
Share on reddit
Share on email
Image: Lightsource BP.

The levelised cost of electricity (LCOE) of solar in the UK could fall to just £28/MWh by 2040, according to new projections published by the country’s government.

Yesterday (24 August 2020) the UK’s Department for Business, Energy and Industrial Strategy (BEIS) published its annual update of electricity generation cost estimates, detailing how it expects the costs of renewables to fall in the coming years.

Those statistics now show a staggering downward revision of solar LCOEs in the country. Having forecast in 2016 for solar to generate at a cost of around £68/MWh in 2025, BEIS’ updated stats put the 2025 LCOE at just £44/MWh.

This would be made up of around £30/MWh in construction and equipment costs, fixed O&M costs of £10/MWh and a further £4/MWh of pre-development costs, such as planning and permitting.

Costs within BEIS’ central forecasts are expected to fall to £39/MWh in 2030, £36/MWh by 2035 and around £33/MWh.

BEIS’ lowest cost forecast, however, places solar’s 2040 LCOE at just £28/MWh.

The government’s forecasts place solar as the cheapest source of renewables from the onset, being able to produce power cheaper than other forms of renewables – notably onshore and offshore wind – over the next 20 years.

BEIS’ new estimates will be put to the test next year when solar is welcomed back into the country’s next Contracts for Difference (CfD) allocation round – the UK’s key auction mechanism for utility-scale renewables projects – takes place. Having been locked out of the previous two rounds, solar is widely expected to be richly competitive and could yet beat BEIS’ LCOE estimates four years early.

Chris Hewett, chief executive of the country’s Solar Trade Association, said now was the right time for the government to ramp up its ambitions for solar PV.

“Now it is time for the government to set an ambitious target for the deployment of solar PV in the UK, as it has done with offshore wind. Our favoured goal, 40GW by 2030, aligns with recommendations made by the Committee on Climate Change and the National Infrastructure Commission, and is achievable with moderate policy support,” he said.

Additional reporting by Alice Grundy.

Read Next

November 26, 2021
Portugal has launched its latest solar auction that is set to allocate 262MW of floating PV to be installed at seven dams across the country.
November 26, 2021
The European Commission (EC) has approved a €2.27 billion (US$2.56 billion) Greek scheme to support 4.2GW of installed renewables capacity after assessing it in the context of EU state aid rules
November 4, 2021
The installed cost of solar PV, solar-plus-storage and standalone battery energy storage in the US was reduced across all market segments between 2020 and 2021, with the biggest drop seen in the utility-scale segment. 
PV Tech Premium
November 3, 2021
In this exclusive video from PV Tech publisher Solar Media’s Solar & Storage Finance USA event last month, a panel of supply chain experts discuss immediate challenges and potential remedies to the situation.
October 29, 2021
Poland is set to hold a series of renewables auctions before the end of the year, including the country’s first that will support hybrid projects.
October 27, 2021
More than half of utility-scale solar projects planned for next year could be at risk of delay or cancellation as a result of surging materials and logistics cost, new analysis has claimed.

Subscribe to Newsletter

Upcoming Events

Solar Media Events
December 1, 2021
Solar Media Events
February 1, 2022
London, UK
Solar Media Events
February 23, 2022
London, UK
Solar Media Events
March 23, 2022
Austin, Texas, USA
Solar Media Events
March 29, 2022
Lisbon, Portugal