Jan 03, 2017 (LBO) – Solar power is now cheaper than coal in some parts of the world, and could become the lowest-cost option in less than a decade.
Last year, countries such as Chile and the United Arab Emirates broke records with deals to generate solar electricity for less than 3 cents a kilowatt-hour, half the average cost of coal power, according to a Bloomberg report.
Since 2009, solar prices are down 62 percent. This year, Saudi Arabia, Jordan and Mexico plan auctions and tenders, aiming to cut prices even further.
Companies such as Italy’s Enel SpA and Dublin’s Mainstream Renewable Power, who gained experienced in Europe, stand to benefit as they seek markets abroad as subsidies dry up at home, according to Bloomberg New Energy Finance.
An August auction in Chile yielded a contract for 2.91 cents a kilowatt-hour. In September, a United Arab Emirates auction grabbed headlines with a bid of 2.42 cents a kilowatt-hour.
There is “a Wal-Mart effect” from higher volumes and lower margins, according to Sami Khoreibi, founder and chief executive officer of Enviromena Power Systems, an Abu Dhabi-based developer.
“We’re seeing a new reality where solar is the lowest-cost source of energy, and I don’t see an end in sight in terms of the decline in costs,” Khoreibi said.