Impact on solar energy costs oftripling renewables capacity by 2030
Rupert Way, Cameron Hepburn

Oxford Smith School of Enterprise and the Environment | Analysis | 17 May 2023

ISSN 2732-4214 (Online)

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Suggested citation: Way, Rupert & Hepburn, Cameron (2023). Impact on solar energy
costs of tripling renewables capacity by 2030. Oxford Smith School.

The views expressed in this paper represent those of the authors and do not necessarily represent
those of the Smith School or other institution or funder. The paper is intended to promote discussion
and to provide public access to results emerging from our research. It may have been submitted for
publication in academic journals. It has been reviewed by at least one internal referee before
publication.

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Impact on solar energy costs of tripling
renewables capacity by 2030
New estimates show a tripling of renewables by 2030 results in an expected decline of40-50% in global average solar costs.
In May 2023 COP28 president Sultan Al Jabar called for a global ramp up of renewableenergy, including a tripling of capacity by 2030i. Solar and wind are already the cheapest
forms of new-build electricity generation in most places on the planetii, but they are also bothsubject to strong technology learning effectsiii, so this ramp up is likely to lead to even lower
costs in future.
Decisions about which technologies to deploy, and when, in order to reach climate goals, arehighly influenced by expectations of their future costs. Historically, energy-economy models
have vastly overestimated the costs of several key clean energy technologiesiv, and in doing
so, they have also overestimated the difficulty of rapidly transitioning to a net-zero energy
systemv.
Using recently developed probabilistic technology cost forecasts, we estimate the impact oftripling renewable capacity in the eight years 2023-2030 and find that this would likely lead tosolar costs being halved over the course of the decade.
While solar costs increased marginally since 2021 due to Covid-19 related supply chain
disruptions and the invasion of Ukraine, the multi-decadal time series shows that where there
have been cost increases in the past, solar has returned to the trend of cost declines within anumber of years.
Rapid deployment of green energy technologies that are subject to strong learning effects,
such as solar, wind, and batteries, increases the probability of further technological progressand cost reductions, in a virtuous cycle that then leads to further deploymentvi.
Methods
We use the empirically validated experience curve cost forecasting method that wasdeveloped by Lafond et alvii, and applied to the energy system as a whole by Way et al.viii at
the University of Oxford. We assume a constant capacity factor so that the proposed triplingof capacity is associated with a tripling of energy generation too, and we apply theforecasting method to the scenario of tripling renewable electricity generation by 2030.

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A tripling of renewables in the eight years 2023-2030 would correspond to an average annual
growth rate of 15%. But in recent years, solar deployment has been growing at 25-30% peryearix. In addition, solar currently has far lower deployment than windx, and has a stronger
learning curve, so there is more scope for solar to grow faster than wind over the comingyears. Therefore, rather than assuming that solar growth slows to 15%, in our central case
we assume annual growth of 20% for solar to 2030, and we use the observed 2021 costof 48$/MWh given by IRENAxi. The median of our 2030 probabilistic forecast for the global
average cost of photovoltaics (PV) is 27$/MWh. This is the value given by the deterministic
experience curve model. The 50% confidence interval is 20-35$/MWh, and the 95%
confidence interval is 12-60$/MWh.
Assuming annual growth of 25% for solar to 2030, the median of our 2030 probabilistic
forecast for the global average cost of PV is 25$/MWh. The 50% confidence interval is 1833$/MWh, and the 95% confidence interval is 11-56$/MWh.
Assuming annual growth of 15% for solar to 2030, the median of our 2030 probabilistic
forecast for the global average cost of PV is 32$/MWh. The 50% confidence interval is 2442$/MWh, and the 95% confidence interval is 14-71$/MWh.
In all cases the median of the cost forecast is well below unabated fossil fuel generation
costs.
Comparing the initial cost of 48$/MWh in 2021 with forecast costs of 25$/MW or 27$/MWh in
2030 corresponds to approximately a 40-50% cost reduction.

References

i See e.g. https://www.middleeaststar.com/news/273808934/cop28-chair-urges-tripling-of-renewables-

capacity-by-2030
ii International Energy Agency, World Energy Outlook 2022
iii Lowe, R. J., & Drummond, P. (2022). Solar, wind and logistic substitution in global energy supply to2050–Barriers and implications. Renewable and Sustainable Energy Reviews, 153, 111720.
iv Xiao, M., Junne, T., Haas, J., & Klein, M. (2021). Plummeting costs of renewables-are energy
scenarios lagging?. Energy Strategy Reviews, 35, 100636.
v Way, R., Ives, M. C., Mealy, P., & Farmer, J. D. (2022). Empirically grounded technology forecasts
and the energy transition. Joule, 6(9), 2057-2082.
vi Grubb, M., Drummond, P., Poncia, A., McDowall, W., Popp, D., Samadi, S., ... & Pavan, G. (2021).
Induced innovation in energy technologies and systems: a review of evidence and potential
implications for CO2 mitigation. Environmental Research Letters, 16(4), 043007.

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vii Lafond, F., Bailey, A. G., Bakker, J. D., Rebois, D., Zadourian, R., McSharry, P., & Farmer, J. D.

(2018). How well do experience curves predict technological progress? A method for making
distributional forecasts. Technological Forecasting and Social Change, 128, 104-117.
viii Way et al. 2022, Empirically grounded technology forecasts and the energy transitionix Way et al. 2022, Empirically grounded technology forecasts and the energy transition
x International Energy Agency, World Energy Outlook 2022
xi IRENA 2022, Power Generation Costs in 2021

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