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CRU: Is Solar Power Cheaper Than Coal

August 28, 2017

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It is increasingly stated that renewable power generation costs are now lower than costs of traditional fossil fuel generation; furthermore, that the continued renewable generation cost decline will result in 'cheap' electricity for all.

Solar power is becoming increasingly competitive with coal-fired power generation; however, our analysis suggests that financial assistance for solar projects is still required for low solar power price agreements to be viable.  The very serious negative externalities associated with coal-fired generation-climate change and air pollution-mean that such measures are absolutely warranted in order to encourage investment in renewables. In the absence of a comprehensive global policy agreement that accounts for these external costs, our analysis suggests that fossil fuel generation remains the cheaper form of electricity generation.

Historical cost comparisons

CRU has collected information on 34 commercial scale solar power plants that have been installed since 2010 in order to estimate the levelised-cost of electricity (LCOE). LCOE can include a variety of assumptions, however, in order to compare the true, underlying cost of power generation (i.e. before government or policy intervention), the methodology we have adopted does not account for any form of financial penalty (e.g. in the case of a carbon charge) or assistance from subsidy or favourable financing. We believe this approach provides a clearly defined framework on which the impact of policy decisions can be tested and a start point for any investment decision.

About CRU 

CRU offers unrivalled business intelligence on the global metals, mining and fertilizer industries through market analysis, price assessments, consultancy and events.

Since our foundation in 1969, we have consistently invested in primary research and robust methodologies, and developed expert teams in key locations worldwide, including in hard-to-reach markets such as China. CRU employs over 250 experts and has more than 10 offices around the world, in Europe, the Americas, China, Asia and Australia - our office in Beijing opened in 2004.

When facing critical business decisions, you can rely on this first-hand knowledge to give you a complete view on a commodity market. And you can engage with our experts directly, for the full picture and a personalised response.

CRU - big enough to deliver a high quality service, small enough to care about all of our customers.

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