The cost of solar energy and onshore wind power may fall to the same level as generation from fossil fuels by the 2020s, energy consultant Poyry Oyj said in a report.
Solar plants in Spain may produce electricity competitive with coal and gas as early as 2021, in Portugal by 2022 and in parts of Italy by 2025, Poyry said. Both solar and wind may reach so-called grid parity in Turkey by as early as 2018.
Onshore wind is expected to be competitive without state subsidies in Ireland in 2020 and in the U.K. by 2021.
A breakthrough in the cost and efficiency of storing energy and a rapid drop in the expense of building clean-power plants will speed up a trend in which renewable technology can compete with conventional generation without subsidies, Anser Shakoor, a senior consultant at Poyry, said by e-mail.
Reaching parity doesn’t mean renewable installations will surge and capital costs must continue to fall and efficiency improve in the long term to guarantee large expansion, he said.
“The revenues of any investment now undertaken with, say, a 30-year economic life will be affected by the build of unsubsidized renewables as typical subsidy regimes are 10 years to 20 years in duration,” Shakoor said. Investors must ensure revenue projections account for rising amounts of unsubsidized renewables to avoid overestimating long-term profitability.