Global energy markets have been changing rapidly for some time now, but recently a milestone has come that will be difficult to surpass. For the first time in history, solar energy has become the most widely used form of energy. cheaper to get electricity in several emerging markets around the world, surpassing traditional energy sources such as gas and coal.
While some industry experts had a hunch that solar would eventually become more cost-effective, it has been surprising how quickly we are seeing this shift, as confirmed by recent reports such as that of Bloomberg New Energy Finance.
There were already cases in which the Solar energy managed to surpass wind energy in production costs, but these had always been exceptional situations, such as competitive auctions in the Middle East. Now, the trend is changing globally.
Technological advancement has allowed new solar installations to compete directly, and successfully, with traditional sources such as coal or natural gas. In many markets, solar energy It's already cheaper that these sources are more polluting.
Compared to wind power, in many emerging markets we are seeing solar projects that are significantly more cost effective. According to Bloomberg's report, installation costs for wind power are much lower than for other emerging markets. solar photovoltaic are falling faster than wind power, making it a leading option.
Globally, in 58 emerging economies, including China, India and Brazil, both solar and wind energy have reached very competitive costs. According to projections, solar energy will continue to become cheaper, resulting in an unprecedented situation for the electricity industry, where this renewable source could displace wind power in many regions.
The price of solar energy vs. the price of coal
Last year, India signed a contract to produce solar electricity at $64 per megawatt/hour. However, Chile set a record in August, managing to bid $29 per megawatt/hour, a milestone that places solar energy as almost 50% cheaper than coal.
The report of Lazard Levelized Cost of Energy confirms this trend, showing that the levelized costs of renewables are falling every year, while those of conventional sources, such as coal and gas, are increasing.
Globally, renewables are already more competitive in various energy auctions, even When combined with battery storage systemsThese solutions allow electricity generated during the day to be stored for use at night or during times of low production, eliminating the intermittency that has generally been a criticism of renewable energy.
Why there is a great growth of renewables in emerging countries
Emerging markets are driving renewable energy growth at a much faster pace than the world's major economies. A key driver of this growth is the financial accessibility renewable energies, which have drastically reduced their costs thanks to technological improvements and economies of scale.
A report by the International Renewable Energy Agency (IRENA) shows that renewables account for the majority of new installed generation capacity. In addition, competitive auctions In countries such as Saudi Arabia, Jordan and Mexico, solar energy prices have reached record levels of 2,42 cents per kilowatt hour in the United Arab Emirates and 2,91 in an auction in Chile, consolidating the Economic advantage of solar over coal.
In addition to being economically advantageous, solar energy is set to contribute significantly to the reduction of CO2 emissions globally, which represents an additional incentive for its adoption in markets that until now depended on coal or oil.
The role of foreign banks and companies has also been fundamental, especially in countries such as Mexico and Chile, where a large part of the investment in renewables has been financed with foreign capital. However, in countries such as China, financing comes from local institutions and banks.
The challenges and limitations of renewables in emerging countries
While the growth of renewable energy has been impressive, it also brings with it significant challenges. The ability to integrate these energy sources into unstable power grids, the high intermittence of renewable energy and the technical problems resulting from the rapid advance in its adoption are some of the obstacles that these countries are facing.
Experts point out that in an energy system highly dependent on renewables, as could be the case in the near future, new technologies will be needed. flexible power plants to act as a backup in case renewables cannot cover all demand. These plants could be biogas or biomass-based, but hydrogen technologies are also being investigated as a possible solution.
A recent report from the Fraunhofer Institute also shows that storage technologies such as batteries are essential to overcome the intermittency problems of renewables. Although currently, storage costs are high, they are expected to continue to decrease over time, which will facilitate their widespread integration into the electrical system.
Renewable energies are set to be the definitive long-term solution for generating electricity. Not only are they cheaper than fossil fuels, but their benefits in terms of sustainability and reduction of CO2 emissions make them an essential solution in the fight against climate change.