Cheap Natural Gas: Fracturing Dreams of a Solar Future?

October 16, 2013 | State of the Market Report

Hydraulic fracturing in the U.S. has shown that cheap, abundant natural gas can be a reality worldwide, with significant shale reserves on every inhabited continent. While government subsidies currently insulate solar from competition from gas, cheap gas could end the dream of unsubsidized grid parity and force solar to the fringes as subsidies expire. Using a detailed levelized cost of energy (LCOE) analysis, we found solar becomes competitive with gas in all 10 regions analyzed by 2025 in the most likely gas price scenario. Solar costs fall faster than gas prices even in gas-rich regions, as increasing domestic demand and liquid natural gas (LNG) exports counter significant shale development. Solar’s eventual cost-competitiveness means increased gas penetration actually benefits it, by enabling hybrid gas/solar technologies that can accelerate solar adoption without subsidies and increasing intermittent renewable penetration without expensive energy storage or infrastructure improvements.

Coverage Area

  • Owning the Energy Transition

Table of Contents

  • Executive Summary
  • Landscape
  • Analysis
  • Outlook
  • Endnotes

Lead Analyst

Ed Cahill
Research Associate


Matthew Feinstein

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