Unsubsidized utility-scale solar electricity will become cost-competitive with natural gas by 2025, according to Lux Research. In fact, increased gas penetration actually benefits solar by enabling hybrid gas/solar technologies that can accelerate adoption and increase intermittent renewable penetration without expensive infrastructure improvements.
Solar’s competitiveness is led by a 39 percent fall in utility-scale system costs by 2030 and accompanied by barriers to shale gas production – anti-fracking policies in Europe and a high capital cost in South America.
On the macroeconomic level, a ‘golden age of gas’ can be a bridge to a renewable future as gas will replace coal until solar becomes cost competitive without subsidies. On the microeconomic level, solar integrated with natural gas can lower costs and provide stable output, according to Lux’s report, “Cheap Natural Gas: Fracturing Dreams of a Solar Future.”
Lux Research analysts created a bottom-up system cost model and analyzed levelized cost of energy (LCOE) to evaluate solar, gas, and hybrid technologies' competitiveness under different gas price scenarios across 10 regions around the world through 2030. Among their findings:
