Solar has plunged in price faster than anyone predicted. And modeling of that price decline leads me to forecast that solar will ultimately reach prices lower than virtually anyone expects.
Before going on to the future, let’s look at the last decade, and how exceptional it’s been. To do so, it’s tempting to look at the constant drumbeat of record-setting news-making solar auction prices, like bids at a costs of 1.35 cents per kwh in Abu Dhabi or 1.6 cents per kwh in Portugal.
I love talking about these record-setting prices, but by nature they reflect outliers in price. In addition, from the day a record-setting price is announced, it’s often 2 or more years until the project is actually built. These prices reflect the costs solar developers think they can achieve at some point in the future.
Instead, let’s look at metrics of average cost of projects actually built since 2010 and averages (not just outliers) of bids for projects scheduled to come online in 2020. All the costs below are unsubsidized, by the way, as are all costs used in this post.
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