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    China aims to make solar power cheaper than coal by 2030

    Jun 13,2023 | Daxtromn power

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    China aims to make solar power cheaper than coal by 2030

    The red and orange warnings of smog in Beijing for several consecutive days, except that we can only see the most penetrating red lights on the way home from get off work.
    Since coal is the culprit at the source of smog, "the large-scale application and popularization of renewable energy" should no longer be a "topic for the occasion" exclusive to winter. Is there any way to make it faster?
    Some people may sneer: "Development of new energy sources" is a slippery word every time, but the status quo has never changed. This is an issue related to China's energy structure, and it is an issue that cannot be changed within 20 years.
    Energy structure adjustment. Indeed, this is probably a "Chinese dream" that has been talked about for 20 years and will be talked about for decades to come. In 2015, although my country's energy structure has improved to a certain extent, the overall pattern remains unchanged:
    Among fossil energy sources, coal, oil, and natural gas accounted for 64%, 18.1%, and 5.9% respectively, accounting for a total of 91%; among non-fossil energy sources, hydropower accounted for 8.5%, nuclear power accounted for 1.4%, wind power accounted for 1.6%, and solar energy accounted for 91%. 0.5%, others such as biomass energy are negligible.
    After so many years of modification, the structure has basically remained the same. The interests of all parties are secondary, but it is simply impossible under the current conditions.
    So, first of all, we need to understand why renewable energy such as water energy, solar energy, and wind energy cannot completely replace coal now, and why are wind power and photovoltaic power generation called "garbage power"?
    Simply put, there are four points: high cost, instability, low conversion rate, and poor energy storage. It's all about technology.
    What's more, the construction of a thermal power plant usually requires an investment of hundreds of millions to several billions to generate electricity. The construction period is short and the benefits are quick. To build a hydropower plant with the same capacity, the investment is often several times to dozens of times that of a thermal power plant. The cycle takes 5-10 years or even longer.
    If you were an investor, would you choose the latter? (Look at the current situation of Musk SolarCity's serious losses)
    Solar energy, the most popular new energy industry in recent years, has been hailed as "the renewable energy with the highest power generation cost" by many research reports. In China's energy structure, it is indeed insignificant.
    So today, let's talk about the cost of solar energy first.
    According to a report by the technology media MIT, as early as 2014, Ecofys, a consulting company focusing on research on renewable energy, had conducted research on environmental pollution, climate change, resource consumption costs, and photovoltaics in the European Union (one of the regions where clean energy is most popular in the world). The working capital and operating costs of the power plant are analyzed.
    In the evaluation process, a measure called "levelized cost" (the cost of building and operating a power plant in a particular estimating the cost per megawatt-hour in the country, including estimating the monetary value of pollution, land use, and resource consumption), the researchers analyzed the data as follows:

    Assuming that the factory will increase its production capacity to the maximum, the "levelized cost" of new coal and natural gas plants in the EU is only more than 40-50 Euros/MWh ($52);

    The "levelized cost" of offshore wind power is around 70-80 EUR/MWh ($84);

    Utility solar PV is around €90-100/MWh ($105);

    Nuclear power generation is about 80-90 EUR/MWh ($94.5);

    The final conclusion is: the cost of solar power generation is the highest, much higher than that of wind power generation, and close to the cost of nuclear energy.
    In fact, the reason for this result depends on a different parameter in the calculation process - "energy consumption cost".
    The researchers explained that since most solar panels in the world are labeled "Made in China", the massive consumption of metal resources and the high cost of making solar panels have significantly increased the cost of solar power generation, which is higher than that of wind power generation.
    At the same time, China's power industry is a coal-intensive industry. The area for laying solar equipment is limited, the operation is unstable, the conversion rate is low, and the recovery cycle is long. If it cannot be used on a large scale, high cost is an inevitable thing.
    What does high cost mean? Enterprises need to rely on government subsidies to survive, photovoltaic power generation cannot be popularized on a large scale, innovation and manufacturing capabilities lag behind, technology research and development is slow, and the chance of being noticed by capital is small...
    In fact, these aspects are interlocking and cross-influenced. It is precisely because the technical bottleneck is difficult to break through that the accumulated cost in the solar power generation production chain will be huge and the scale will be limited.
    In 2030, China will usher in the dawn of popularization of solar power generation?
    Recently, however, we have discovered a "rift" that has the opportunity to widen in China's energy structure that is "still shrouded in smog and unable to find its way". This recently released Bloomberg energy analysis report may give us some positive "hints":

    Global solar prices have fallen by 62% since 2009. At the same time, every link in the solar power supply chain has cut costs accordingly.

    At present, the global average cost of coal electricity is about 6-7 cents/kwh (0.4-0.5 yuan), and in 2016, many developing countries including Chile and the United Cents/kwh solar power contracts.

    From a global perspective, it is expected that in the next ten years, solar energy is likely to become the cheapest energy source for power generation. However, the rate at which solar costs will decrease can vary widely from country to country. Regions and countries like Europe and Brazil that need to import coal or charge a "carbon emission tax" may be the first to see the "dawn" of coal and solar power generation costs being equal before 2020.

    Although China is the world's largest solar market (the installed capacity has surpassed that of Germany), its energy structure is dominated by coal, and it may take until 2030 to reduce the cost of solar energy to a level below that of coal.

    Jenny Chase, the chief new energy analyst of Bloomberg New Energy Finance, pointed out in the report that the average cost of ground solar energy systems above 1MW in the world is US$1.14/W; by 2025, this figure will be reduced to 0.73 cents, and the cost will be reduced. 36%.

    The cost of solar energy will be lower than that of coal in the next 10 years, the picture comes from Bloomberg
    In fact, as early as 2015, the China Association of Comprehensive Utilization of Resources gave a benign prediction in the "China Photovoltaic Power Grid Parity Roadmap": It is estimated that by 2020, the cost of photovoltaic power generation in my country will be reduced to 0.6~0.8 yuan/kwh , can be reduced to 0.6 yuan/kwh in 2030.
    Clearly, the reduction in the cost of solar power will help reduce the risk premium associated with borrowing for companies and will increase capacity to a new level.
    And Adnan Amin, director-general of the International Renewable Energy Agency, is even more astonishing, thinking that the reduction of solar energy costs will change the entire industry structure:
    “The trend of solar costing less than coal is becoming routine in more and more markets. You’re going to see a 20% reduction in solar prices for every doubling of factory capacity.”
    In other words, with the increase in scale and sales and the gradual reduction of profit margins, the "Wal-Mart effect" in the solar power supply chain will become more and more obvious. "Small profits but quick turnover" may be a major development strategy for the solar industry.

    Construction costs of solar power plants. Image via Bloomberg
    Technology is the key, market competition is the "catalyst"
    In fact, the solar power boom has lasted for a full 10 years. And "technology" has always been the key to improving the level of the solar power generation industry and reducing production costs.
    We have just mentioned that metal consumption level and energy storage technology are two important factors that keep the cost of solar power generation high.
    But in the past two years, whether it is the improvement of diamond wire saw technology (which can more efficiently cut crystalline silicon wafers, which is the main material of panels), or the substantial improvement of fuel cell technology, it has largely reduced The many pain points of the solar energy industry in terms of materials, manufacturing processes, and power generation applications have also enabled solar energy to gradually gain an advantage in the competition with fossil fuels.
    In addition, the healthy competition in the industry has also accelerated the decline in the cost of solar technology. Since the solar energy market in emerging countries is very hot, major solar photovoltaic companies around the world have begun to grab market orders through bidding.
    For example, in August this year, Chile signed a contract of 2.91 cents/kwh through bidding, while the United Arab Emirates reached a solar power transaction at a price of 2.42 cents/kwh by holding a large auction.
    Countries such as Saudi Arabia, Jordan, and Mexico have also begun to plan to further reduce the price of solar power through auctions and bidding.
    The lower the price, the more hope of grabbing an order, and in order to maintain profit margins, bidding companies must reduce technology costs. Therefore, some solar system integrators have made bold predictions that the "downhill" speed of solar power generation costs will not slow down in a short time.
    But in the final analysis, "cost reduction" is only an important part of expanding the scale of the solar industry, but it does not represent the whole.
    "Stability" is determined by the sky, and the cost can be continuously reduced, but the problem of energy storage technology is the biggest "pain point" in this industry.
    And an industry insider told us, want to improve energy storage technology? It's hard to reach the blue sky (expect someone to refute). From the perspective of "stability", solar energy and wind energy can never replace thermal power.
    But the development of solar energy will see changes.
    What's more, whether energy is expensive or cheap, in fact, every region has its own standard, but it ultimately depends on how much we are willing to pay for energy.
    For the "anti-smog cause", are you willing to continue "Amway" solar energy?
    If you can't catch up with this batch, you have to wait another three months