Solar Emerges as the Cheapest Source of Electricity: EY

EY's predictions for the energy transition include renewables, predominantly wind and solar, accounting for 38 percent of the power mix by 2030 and surging to 62 percent by 2050.

December 08, 2023. By Abha Rustagi

In a significant shift, solar power has established itself as the most cost-effective source of newly-built electricity generation in multiple global markets, outperforming fossil fuels by a substantial margin, according to a recent report by consultancy firm EY.

The report, titled 'If every energy transition is different, which course will accelerate yours?,' highlights that the levelised cost of electricity (LCOE) for solar photovoltaic (PV) is now 29 percent lower than the cheapest fossil fuel alternative. The cost of solar power generation has witnessed a remarkable 88 percent decrease.

EY's predictions for the energy transition include renewables, predominantly wind and solar, accounting for 38 percent of the power mix by 2030 and surging to 62 percent by 2050. The report foresees renewables becoming the dominant power generation globally by 2038, with China, Europe, and the US driving a 53 percent increase in solar and wind generation, collectively producing over 57 percent of global solar and wind output by 2050.

However, the report emphasizes that the widespread adoption of solar necessitates a fundamental transformation of the energy system. The grid is anticipated to face extreme pressure, demanding urgent solutions to expand the network and embed flexibility capabilities for a balanced and reliable system.

EY also underscores the varying impacts on different markets, with Europe facing a tenfold increase in flexibility requirements by 2050, constituting 26 percent of the total regional electricity demand.

Supply chain challenges and permitting delays are identified as obstacles slowing down the construction and installation of new assets, particularly in the US, where renewables developers face extended waiting periods before connecting to the grid despite having substantial capacity ready for deployment.

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