Government report confirms large-scale solar as cheapest power source

By Low Carbon Energy

31 Aug 2023

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In a ground-breaking revelation, the UK government has released a report confirming that large-scale solar farms offer the most cost-effective solution to power the nation.

The findings, published by the Department for Energy Security and Net Zero, underscore the pivotal role of solar energy in achieving net zero goals and ushering in a greener future.

This announcement serves as a wake-up call to opponents of sustainability, marking a significant milestone in the country's renewable energy journey.

The Changing Landscape of Energy Costs

The report presents a comprehensive analysis of levelised costs, a critical metric that measures the average cost per megawatt-hour generated over the lifespan of various energy generation methods. Notably, this update is the first in three years, reflecting the evolving energy landscape and advancements in renewable technologies. Solar Energy UK highlights the report's alignment with a previous study by consultancy WSP, which adjusted key parameters to better reflect the industry's progress.

Solar Takes Centre Stage

The revised estimates shine a spotlight on solar power's remarkable cost-effectiveness. The report's figures reveal a notable reduction in levelised costs for solar energy, attributable to multiple factors. The increasing size of solar farms, along with the plummeting costs of solar modules and their enhanced capacity, contributes to the improved economics of solar power generation. Despite short-term inflationary pressures post-Covid, the report affirms the remarkable progress made by the solar sector.

Comparative Analysis

Drawing comparisons with other energy sources, the report highlights the stark contrast in costs. For projects commissioning in 2025, combined-cycle gas turbines (CCGTs) are projected to have costs of £114/MWh, largely driven by fuel and carbon emissions. In contrast, solar energy stands out with levelised costs as low as £41/MWh in 2025, representing a decrease of £6 over three years. This competitive advantage positions solar as an attractive and economically viable alternative to conventional energy sources.

Future Projections

The forward-looking aspect of the report offers tantalizing prospects for the solar energy industry. Anticipated cost reductions predict that solar power could reach a central estimate of £30/MWh by 2040, further solidifying its status as the cost-effective leader in energy generation. In contrast, traditional gas generation costs are expected to soar to an astonishing £165/MWh by the same time frame. These projections highlight the long-term sustainability and economic benefits of embracing solar power.

A Call to Action

Chis Hewett, chief executive of Solar Energy UK, lauds the report's findings as a "ringing endorsement" of solar energy. He emphasises the government's ambitious target to achieve 70GW of solar capacity by 2035 and underscores the pivotal role solar energy plays in reducing energy costs. The prevailing cost advantage of solar power over gas generation underscores the urgency of transitioning to renewable energy sources to secure a cleaner and more affordable energy future.

Beyond the Horizon

The report's implications extend beyond the surface, with the recognition that true levelised costs of solar energy are likely even lower. The inclusion of battery energy storage systems and grid connections further enhances solar's cost-effectiveness. As solar farms increasingly integrate these technologies, the potential for cost reductions becomes even more pronounced, contributing to the overall sustainability of energy production.

The government's endorsement of large-scale solar power as the cheapest energy source is a monumental achievement that signals a paradigm shift in energy generation. With costs continuing to decrease and the industry's growth trajectory remaining strong, solar energy is poised to play a pivotal role in shaping a cleaner, more affordable, and sustainable energy future for the United Kingdom.

The time to invest in solar power is now, and this report serves as a clarion call for individuals, businesses, and policymakers to embrace the sun's boundless potential.

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