New research from energy giant BP shows that the global cost of calibrated kilowatt-hour electricity (LCOE) for solar power could fall by as much as 55% by 2030 as technology and production costs fall.

In its latest Energy Outlook report, BP said the solar industry’s cost of generating electricity continues to fall, supported by increasing module efficiency and larger project sizes. The report provides guidance for the development of the global energy system over the next 30 years.

In the three scenarios included in the report, solar’s LCOE falls by 40-55% to 2030, including integration costs. According to research firm BloombergNEF, the global average LCOE for large ground-based solar plants in the first half of 2021 was $48 per MWh.

BP said the reduction in generation costs would be offset by the growing expense of balancing the power system, in addition to the growing share of variable power. As a result, the pace of cost decline will slow in the final two decades of the outlook and eventually plateau.

Bp’s net-zero scenario predicts that nearly 21TW of solar and wind power will be developed by 2050

The declining role of fossil fuels is offset by the rapid expansion of solar and wind power, with the share of renewables in global primary energy rising from about 10% in 2019 to 35-65% in 2050 in the three scenarios.

As a result of increased electrification, total solar and wind installations in BP’s acceleration and net zero scenarios by 2050 are more than 15-fold higher than in 2019, and nine-fold higher in the new momentum path.

In 2050, emerging economies would account for more than three-quarters of the increase in solar and wind power under both the acceleration and net zero scenarios, with China contributing about a quarter of the increase.

The world is expected to develop 22.7TW of solar and wind energy by 2050, according to the net-zero scenario in the latest edition of the IEA’s World Energy Outlook, released in October. BP’s net zero path predicts nearly 21TW of solar and wind capacity in 2050, slightly less than the IEA’s projections.

Installed PV capacity vs cost of small PV systems by country

BP’s rapid growth in solar and wind capacity depends on a number of favourable factors, including transmission and distribution capacity, availability of key materials, planning permission and social acceptability.

In addition, the growth of solar and wind will require a significant increase in the pace of investment in new capacity, enabling technologies and infrastructure.

The report said there was still “significant uncertainty” about the success of countries and regions in meeting these goals and commitments over the past few years, despite increased global government ambition and new momentum to tackle climate change.