According to a report from Deutsche Bank, electricity generated by solar power is the cheapest in Chile now. In fact, both solar and wind power there make electricity more cheaply than fossil fuels do.

Deutsche Bank Equity Research North America conducted an analysis by examining PV solar projects in Chile. The research showed solar had become the cheapest form of electricity generation. For example, coal power had rates of US$85/MWh but for recent solar PV farms the rate was $65 to $68/MWh. Obviously, this is quite a difference.

A concentrating solar power project came in at $97/MWh, but it also had storage. It would have been interesting to see what the rate was for one without storage, for the sake of comparison, and what form of storage is being used.

$0.52/W is the price for PV modules, but that cost drops to less than 50 cents for larger projects. Still, Chile could experience one gigawatt of solar installations this year and has about 2 GW under construction. It has been said that Chile doesn’t have a renewable energy problem, it has a transmission problem, because the grid was not built in parallel to the new renewable energy installations.

The thing is, technology projects often have snags that crop up and seem like deal-breakers, until they are they dealt with. Why would Chile’s transition to renewable energy be completely smooth?

It’s not realistic to expect that it would be – first renewables were considered by some to be far too expensive, then there was no energy storage – but now that’s being addressed. Grids are outdated, but they can be revamped or expanded too. In point of fact, one might argue that the momentum generated by the various succcess of renewable energy is driving technological change in related industries.

If solar power electricity is already cheaper than fossil fuel electricity, how much cheaper will it be in five years there? Chile hasn’t even been at it that long, and already has surpassed grid parity. This achievement is an example to us all.