Solar energy has exceeded all expectations over recent years. Economies of scale has lowered manufacturing costs and efficiency of the solar cells to the point that installing a solar energy generation plant is now significantly cheaper than fossil fuel or even maintaining an existing unit. The solar energy landscape has changed so much in terms of costs and performance that it requires completely new analyses.
Today, solar energy is dramatically and differentially cheap. In reasonably sunny places, it is by far the cheapest form that we humans have managed to invent for generating electricity. A decade ago, solar energy represented less than 1% of the world’s energy. Now it is 9%, and growing fast.
This is obvious, solar energy is not the solution to everything. The sun does not shine at night, although the batteries needed to store the excess energy that the panels generate during the day are also increasingly cheap and accessible. But in many places, such as much of Europe, it barely does so at all in winter, which is precisely when the demand for energy is highest. In many countries, they will need to combine solar energy with hydropower, wind energy and storage to create a truly self-sufficient system.
Investments in solar energy plants are multiplying all over the world and are now much cheaper than they were a few years ago, which is leading even some Arab countries or others, like India, to see them as a long-term solution. Those who are still planning to rely on the old way of generating energy using fossil fuels will surely be missing the most transformative technology we have seen in a long time.
Solar energy today is a great investment, with above-average returns. In the future, energy will undergo a transformation similar to telecommunications. If you remember when calling someone was charged according the minutes and it was more expensive the farther away the person you were talking to was? But today, telecommunications prices are set at flat rates? Because technology has turned the cost of moving bits around the internet into something with a negligible cost, which is not worth measuring.
This will going to happen with solar energy: energy so cheap that we will end up paying for it at a flat rate, regardless of our consumption. Solar plants routinely win power auctions with bids that reach 4 cents per kilowatt-hour, a price that is no longer cheaper than a coal plant: it’s cheaper than coal itself.
But in the case of countries like Spain, which has vast amounts of sunshine, the adaptation of the technology to the needs of the country will require a strong and unequivocal commitment to decarbonize industries that have come to depend on fossil fuels the country must now import, thus providing energy much more cheaply for people, business and industry.
It is simply a matter of making the right choice at the right time.