A new report by IRENA (the International Renewable Energy Agency) has confirmed that as deployment of renewable power generation technologies accelerated, there has been a relentless improvement in their competitiveness. After years of steady cost decline, renewable power technologies are becoming an increasingly competitive way to meet new generation needs.
Bioenergy for power, hydropower, geothermal and onshore wind projects commissioned in 2017 largely fell within the range of fossil fuel-fired electricity generation costs. Indeed, levelized cost of electricity (LCOE)1 for these technologies was at the lower end of the LCOE range for fossil fuel options.
The fall in electricity costs from utility-scale solar photovoltaic (PV) projects since 2010 has been remarkable. Driven by an 81% decrease in solar PV module prices since the end of 2009, along with reductions in balance of system (BoS) costs, the global weighted average LCOE of utility-scale solar PV fell 73% between 2010 and 2017, to USD 0.10/kWh. Increasingly, this technology is competing head-to-head with conventional power sources – and doing so without financial support.
Offshore wind power, though still in its infancy in terms of deployment, both saw their costs fall between 2010 and 2017. The global weighted average LCOE of offshore wind projects commissioned in 2017 was USD 0.14/kWh. However, auction results in 2016 and 2017, for offshore wind projects that will be commissioned in 2020 and beyond, signal a step-change, with costs falling to between USD 0.06 and USD 0.10/kWh for offshore wind.
Three main cost reduction drivers have emerged for renewable power: 1) technology improvements; 2) competitive procurement; and 3) a large base of experienced, internationally active project developers. These trends are part of a larger dynamic across the power generation sector, prompting a rapid transition in the way the industry functions. The results of recent renewable power auctions – for projects to be commissioned in the coming years – confirm that cost reductions are set to continue to 2020 and beyond.
The full IRENA report is available at: http://irena.org/publications/2018/Jan/Renewable-power-generation-costs-in-2017