Solar costs tipped to halve and beat wind in 5 years : Renew Economy

By Giles Parkinson on 1 July 2014

One of the world’s biggest solar manufacturers and project developers, the US-based First Solar, has predicted that utility-scale solar costs in Australia will halve over the next five years, becoming cheaper than wind energy by 2020.

First Solar says this should mean that large-scale solar takes up an increasing amount of the capacity required to be built under the current 41,000GWh target.

However, First Solar’s prediction about costs are predicated on the renewable energy target not being removed or diluted in the interim, as is feared under the Abbott government.

First Solar argues that the RET is needed to encourage new projects and bring down costs. More than half the cost of a large-scale solar project, it says, comes from the cost of local of local suppliers and contractors. Without new projects, these costs cannot be reduced.

The graph above illustrates First Solar’s argument. The more solar farms that are built, the more costs can come down, and the less government support is needed. This will allow such projects, eventually, to be built without subsidy. In Chile, where electricity prices are even higher, and the sunshine is even stronger, this is already the case.

But First Solar says that rapid reduction in costs would not occur without a “market bridge” to bring technologies to commercialisation and maturity, particularly if the Clean Energy Finance Corporation and the Australian Renewable Energy Agency are also removed.