[ News ]- The Mystery of the Declining Solar Energy Cost

Let’s first see an example.

One solar power plant, Noor-Ouarzazatecomplex was set up in the desert of Morocco, which the total value is $765 million. It can provide electricity for more than one million households, which is also the world's largest solar power center.

Just a few years ago, the power plants of big scale like Noor-Ouarzazatecomplex must be powered by oil or gas in the desert of north Africa, while Noor-Ouarzazatecomplex is completely driven by solar energy.

Noor-Ouarzazatecomplex is a landmark project, representing the development status, which solar power is one of the infrastructure projects. Part of loans of this project is provided by the world bank, which also reflect from another side that solar energy becomes the energy mainstream.

Of course, the worries of fossil energy and greenhouse effect urge the success of the solar power generation. But when it comes to the main factor of its quick development, price is the most important one.

In many parts of the world, the price of solar power has fallen to a low level, which is very close to that of fossil and natural gas.

Image by: EarthPolicyInstitute/Bloomberg

With the development of solar power, the price of solar panels will fall further. Then, a virtuous circle will be formed.

On the one hand, the price of solar power is falling, on the other hand, the price of fossil fuel power generation is on the rise. This is because the marginal cost is almost 0 after setting up one solar power plant or the wind power station. However, Each watt produced by coal and petroleum needs more fossil fuel. Thus, it is obvious that energy companies will choose the “free” energy rather than fossil fuel. Then, the demand for fossil fuel will decline further.

This is a "self-loop" system. More and more recycled energy launch on the market, then, coal and natural gas power plant utilization rate will drop. As the decline in utilization of coal and gas power generation, the use cost of these electricity-generation ways will rise. And with the rise of coal and gas power generation costs, more renewable energy will be further put into use.

Photo by: Bloomberg

According to reports of BNEF (bloomberg new energy finance), the cost of the coal and natural gas power new plants showed a trend of rising in the second half of 2015, while the cost of renewable energy continued to decline in many major areas around the world.