The continuous drop in price of solar power systems is starting to make the technology a plausible competitor to other fossil fuel power generations, and could overtake coal as the cheapest power source, studies by Bloomberg New Energy Finance has showed.

The report, indicated that solar power was now cheaper than coal in some parts of the world, and could in less than a decade become the lowest-cost option almost everywhere.

According to it, in 2016, countries such as Chile, and UAE broke records with deals to generate electricity from the sun for less than 3 cents a kilowatt-hour, which is half the average global cost of coal power.

It noted that now, Saudi Arabia, Jordan and Mexico are planning auctions and tenders in 2017 to drop prices even further. Companies such as Italy’s Enel SpA and Dublin’s Mainstream Renewable Power, who gained experience in Europe and now seek new markets abroad as subsidies dry up at home are taking advantage of this.

According to the Bloomberg report, since 2009, solar prices have dropped by 62 per cent, with every part of the supply chain trimming costs. That, it explained has helped cut risk premiums on bank loans, and pushed manufacturing capacity to record levels.

“These are game-changing numbers, and it’s becoming normal in more and more markets. Every time you double capacity, you reduce the price by 20 per cent,” the report quoted Adnan Amin, who is Director General of the International Renewable Energy Agency (IRENA) to have said.

It also said better technology has been key in boosting the industry, from the use of diamond-wire saws that more efficiently cut wafers to better cells that provide more spark from the same amount of sun.

“It’s also driven by economies of scale and manufacturing experience since the solar boom started more than a decade ago, giving the industry an increasing edge in the competition with fossil fuels.

It also had Jenny Chase, head of solar analysis for New Energy Finance to have said: “The average 1 megawatt-plus ground mounted solar system will cost 73 cents a watt by 2025 compared with $1.14 now, a 36 per cent drop.”

The report however stated that the speed at which the price of solar will drop below coal would vary in each country, adding that places that import coal or tax polluters with a carbon price, such as Europe and Brazil, will see a crossover in the 2020s, if not before while countries with large domestic coal reserves such as India and China will probably take longer.

It equally reflected rebuttals of this by coal industry officials who said the cost comparisons don’t take into account the need to maintain backup supplies that can work when the sun doesn’t shine or wind doesn’t blow.