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Utility solar prices will continue to drop all over the world even without subsidies

Hardware costs, cost of labour, favourable cost of capital, low taxes and low, but positive, profit margins all contributed to lowering the price of utility solar power in the Middle East. These prices and policies can be replicated elsewhere without direct subsidies and prices will continue to reduce in the future.

Messages for policy

  • Electricity from photovoltaics is cheaper than electricity from fossil fuels in sunny regions, when the right financial conditions are met.

  • Reducing the cost of financing is the key to the widespread implementation of low-cost, large-scale solar energy projects.

  • When financial costs are low, well-designed solar energy projects will pay for themselves: the revenues from selling electricity at market price are enough to pay off the initial investment.

  • Governments can support renewable energy development without subsidies, through direct investments, risk mitigation or low-interest loans to solar energy projects.

  • Local authorities should identify ways to reduce soft costs for project developers, and allow construction of solar projects close to existing access roads and electrical transmission infrastructure.

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Further Reading

  • Bolinger, M., Weaver, S. & Zuboy, J. Is $50/mwh solar for real? Falling project prices and rising capacity factors drive utility‐scale PV toward economic competitiveness. Prog. Photovolt. 23, 1847–1856 (2015). An overview of advances in photovoltaic technology and plant design, published shortly before the announcement of US$30 MWh –1 solar electricity in Dubai.

  • Bolinger, M., Seel, J. & LaCommare, K. H. Utility-Scale Solar 2018: An Empirical Analysis of Project Cost, Performance, and Pricing Trends in the United States (Lawrence Berkeley National Lab, 2018). An empirical study of utility-scale solar photovoltaics plants in the US, in terms of cost and performance.

  • Fu, R., Feldman, D. J. & Margolis, R. M. US Solar Photovoltaic System Cost Benchmark: Q1 2018 (National Renewable Energy Lab, 2018). Published annually, a bottom-up breakdown of photovoltaic system costs and a key reference for tracking the evolution of photovoltaic system cost components.

  • Green, M. A. How did solar cells get so cheap? Joule 3, 631–633 (2019). An overview of the technical, economic, political and personal circumstances that led to today’s low prices of solar panels.

  • Apostoleris, H. & Chiesa, M. The role of financing in achieving ultra-low solar electricity prices in the Middle East. In Proc. 46th IEEE Photovoltaic Specialists Conference (2019). A companion paper to this work, focusing on the financial aspects of the UAE’s large-scale solar projects.

  • Utility-Scale Solar Photovoltaic Power Plants: A Project Developer’s Guide (International Finance Corporation, 2015). An overview from the developer’s perspective on how to finance large-scale solar projects.

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Correspondence to Matteo Chiesa.

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Apostoleris, H., Sgouridis, S., Stefancich, M. et al. Utility solar prices will continue to drop all over the world even without subsidies. Nat Energy 4, 833–834 (2019).

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