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Decimal Digest
16 Jan 2017

When will solar energy completely overtake coal energy

As we project into a future where there is energy abundance, we hear a lot about solar replacing coal completely leading to a better pollution free future and the statistics quoted to justify this belief is the per unit cost of electricity for both sources of energy. We shall examine the right way of comparing solar and coal energy considering the true costs.

The final cost of solar energy should not only be cost of electricity generation but also its storage. Coal is a point source of energy and can be used to generate energy on demand. In case of solar energy if we wish for it to completely replace coal, we need to make infrastructure and electricity storage solutions available on a large scale.

We will particularly have to look at Solar in terms of its ability to reach dispatch characteristics of coal based sources of energy. Capabilities of the energy which include characteristics like load following and ability to provide for Base load.

So, while comparing coal and solar energy we need to include solar energy with storage costs, only then will we be comparing apples to apples. The most cost competitive storage solution available as of now is the thermal storage solution.

Currently, per Lazard’s study the total cost of energy produced by solar plus thermal storage is at $582 ($mm/year) compared to coal which stands at $296($mm/year). There is a cost differential of $286 ($mm/year).

If we project past trends of cost decline of 20% per year for solar energy and 1% per year for coal energy. By the year 2027, the cost of generating stored solar energy will be on average lower than coal energy.

Graph1 : Stored Solar energy versus Coal energy Forecasts


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