New Report Says Solar Will Achieve Near-Global Competitiveness With Natural Gas By 2025

CREDIT: AP Photo/Ross D. Franklin

UNM-Taos Klauer Campus, New Mexico.

CREDIT: Shutterstock

Solar power may be well on its way to near-global cost competitiveness with natural gas by 2025, according to new numbers from Lux Research. And rather than acting purely as market competitors, the two energy sources could form a symbiosis with the construction of hybrid plants that make use of both.

Lux Research used a “bottom-up system cost model” to analyze the levelized cost of energy (LCOE) for solar, natural gas, and hybrid systems using both sources. In plain terms, the LCOE is the cost per kilowatt-hour of a given energy source, accounting for all the costs involved across its life cycle. Lux’s analysis covered 10 global regions through 2030, and ran through three different scenarios: a “Low Gas Price Scenario,” a “High Gas Price Scenario,” and a “Likely Gas Price Scenario.”

The result was that under both the Likely and High scenarios, the LCOE of solar — unsubsidized by any government program — met or dropped below natural gas’ LCOE in virtually every region of the world by 2025.


CREDIT: Lux Research

Under the High scenario, solar actually achieved market dominance in South America, Africa, and parts of India. And even under the Low scenario, solar is competitive in Asia Europe, the Middle East and South America by 2025.

In fact, three previous reports this year predicted a coming boom for unsubsidized solar, including research by Deutsche Bank showing solar hitting grid parity in major areas around the world as early as next year. Wind power is already cheaper than fossil fuels in Australia, and solar is coming up fast.

The analysis did foresee some market turmoil as government subsidies for solar are currently set to expire over the next few years in the United States, China, and Japan. But that brings up the possibility of hybrid plants that combine solar and natural gas power through a variety of methods. The solar portion of the system would protect against price swings for natural gas, while the natural gas portion would ensure a reliable electricity supply on days when sunlight is intermittent. Lux even raises the possibility of gas-powered microturbines that can be installed in an individual home and integrated with a rooftop solar array as a form of distributed generation.

Under the Likely scenario, this sort of piggybacking could bring intermittent renewable power to 25 percent of the U.S. grid’s power supply without compromising stability — with the possibility to go as high as 45 percent.

Other things to watch out for include the possibility that natural gas reserves will prove less durable and economically viable than currently assumed, making the High Gas Price Scenario more likely. Additionally, the technological cost of solar power is still dropping like a rock. And there’s always the possibility the United States and other countries will get serious about cutting carbon emissions, which would also increase solar’s competitiveness by comparison.

Finally, the latest research suggests the leakage of methane — a potent greenhouse gas — in the natural gas industry’s infrastructure is bad enough to render it effectively useless as a “bridge fuel” to renewable energy.