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According to the International Energy Agency’s, or the IEA’s World Energy Outlook 2020, solar is declared as the cheapest electricity in history. Solar technology continues to improve fast. Moreover, it increasing the amount of power that can be generated in a given space and decreasing the cost even further.  It is great indeed to hear that green power is now cheaper than dirty power. Especially since that every day we hear about the increasing impacts of climate change.

The International Energy Agency is an organization trying to create a secure and sustainable energy future for all. The IEA, created in 1974, is at the heart of global dialogue on energy, providing authoritative analysis, data, and real-world solutions to help countries deliver safe and sustainable energy for all. Their work spreads through a vast area. They cover many programs and initiatives which help ensure energy security, tracking clean energy transitions, collecting data, or providing training around the world.

The cost of renewable energy

When the cost of energy from new power plants is taken into consideration, solar is one of the two cheapest sources. It costs less than gas, geothermal, coal, or nuclear. Solar has gotten cheap rapidly. About a decade ago, building a new energy source was considered as one of the most expensive ventures. Subsequently, it has dropped by 90 percent, according to data from the Levelized Cost of Energy Report and as highlighted recently by Our World in Data. Utility-scale solar displays or arrays are now the cheapest option to build and operate.

Cost of renewable energy
Figure 1: Cost of renewable energy plummeted in the last decade

At the initial stages, using the power of the sun used to be very expensive. As a result of that, it was only beneficial for satellites. For example, in 1956, the cost of one watt of solar capacity was $1,825. As the cost further declined due to technology improvements. Moreover, the rise of economies of scale, solar was able to gradually enter into the market as a viable general-purpose energy source. Since 1976, each doubling of solar capacity has led to a 20.2 percent average decline in the price of solar panels. (p.s. Now, utility-scale solar can cost as little as $0.70 per watt).The average cost of a solar panel dropped by 90% from 2010 to 2020 which is a huge advancement.

If focused on calculations:

On average, residential electric utility rates are approximately 12 cents per kilowatt-hour in the US. In 2014 the US average residential household used 911 kWh per month. The average monthly electricity bill was $114 before taxes and fees.

Electricity costs over the years have fluctuated a great deal. It had varied annually, seasonally as well as monthly. But in general, they have gone up noticeably. Retail residential electricity rates, (that is the amount you pay per kilowatt-hour, or ¢/kWh), have risen across the nation at a rate of about 4% on average, over the last 10 years. 

A solar energy system can absolutely help you insulate yourself against these oscillations and increases. Unbelievably, over an eight year span (from 2006 to 2014), worldwide average solar panel module prices have gone down over 75% from $3.25 per watt to about $.72 per watt.

Without any question, this entire story revolves around the location. The property structure and the location of your home, local weather patterns and specially the availability of solar resource (that is, how often and how strong the sun shines) can greatly affect the cost-effectiveness of your installed solar system.

The price of solar

The total price of a complete residential solar panel system has dropped roughly 45% since 2010. This was mostly because of new, widely available financing and leasing options.

Price of solar
Figure 2: Chart that shows prices of solar module’s decline

Fossil fuels, on the other hand, find it very difficult to keep up with this pace. That’s because fossil power plants have to buy mined fuels to function. In coal plants, providing the coal bears about 40 percent of total expenses. But, sunlight and wind are free. This allows the costs of utilizing their power to go down sharply. This was because of the improvements in technology and the growth in the industry.

In the United States, renewable power has been going up, too. Wind power was able to produce less than 1% of energy capacity in the year 2007 and solar produced even less. During this period, coal contributed half. While 2020 estimates are still in the primary level, it’s likely that the total output from renewables, which includes solar and wind as well as other sources like hydropower and biomass, surpassed coal, which only contributed about a fifth of the generated power.

According to John Rogers, an energy analyst at the Union of Concerned Scientists, the year 2020 was considered as the best year ever for new solar installations in the US.

Crossing Over to Clean Power

With the high unemployment and low interest rates, the low prices of the renewable energy sources can stabilize their presence. This is as for the current pandemic situation.

If wealthy countries participate and contribute to the usage of renewables now. Moreover, those technologies will become even more affordable. Then, people will more likely adapt to it worldwide in order to meet increasing energy demands.

One easy option would be to make renewable energy sources flourish more. President Biden has mentioned to bring the United States to 100 percent clean energy by 2035. Meeting this goal would require sending lots of fossil fuel plants into early retirement.

Rather than paying for power indirectly from your local power plant it is better to access it straight from the source. It is evident that solar power is more cost-effective than standard or “regular” electricity. However, installing new solar panels is cheaper than a comparable investment in coal, natural gas or other fossil fuel options. This was according to the the World Economic Forum (WEF). 

One way to think about it is that the sun isn’t going anywhere, as per now at least…, and so that is what we know as a renewable resource. YES. It takes a lot of work to produce electricity. What else can you expect as the definition of efficiency when you set up your own private power plant on your roof?

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