After a period in which the growth of the photovoltaic energy market was stimulated through subsidized tariffs, this technology has reached a level of maturation that allows it to compete in cost with the so-called conventional power sources (such as coal or gas plants). It is expected that in the near future solar power will be the one with the greatest growth of installed capacity worldwide.
And solar may eventually supersede coal in terms of how much energy the two sources generate. There are several reasons why this could happen.
Cost for photovoltaic energy is decreasing over time
Improvements in solar panel materials and economies of scale have driven the cost per MWh down over the years. According to the Lazard’s analysis, the cost per MWh for unsubsidized solar energy went from $359 in 2009 to $43 in 2018 – an 88% decrease.
Lazard analysis takes into account the price of building and operating a power plant. The current cost for coal according to the levelized analysis is set to around $102 per MWh which is already double of the price of solar plants. This price comparison shows that the world might be in the verge of a drastic change of energy matrix, as new investments are already more effective on solar plants than coal.
Environmental issues are adding pressure to coal substitution
Over the years environmental issues with fossil fuels have driven the adoption of renewable energy sources. Solar energy has proven to be a good substitute for coal as the investment on new solar farms increases every year and the advance of new technologies are improving efficiency and costs. The combined use of solar energy with wind and hydroelectric have shown to provide a steady energy output overcoming seasonality problems that were thought to be a point of concern for renewable energy sources.
Extraction of coal is getting harder over the years
Coal is a non-renewable energy and the world reserves are dwindling. According to the World Coal Association, if coal usage stays on the same level the reserves will last for no more than 100 years. What’s more, every year the extraction of coal gets harder and this increases the cost of coal energy even more. There is likely to come a point when it simply doesn’t make economic sense to continue mining coal.
In summary, it seems inevitable that reliance on energy generated from coal will continue to decrease in the coming years. As renewable energy technology improves and comes down in price, an ever increasing share of energy will be generated from such sources – solar power being one of them. But will renewables ever fully replace fossil fuels? That still remains to be seen.