Tumbling renewable energy costs close in on fossil fuels
The cost of generating electricity from renewable resources such as solar and wind has more than halved in the last five years according to the International Energy Association.
The group’s new report, entitled ‘Projected Costs of Generating Electricity: 2015 Edition’, suggested that the median cost of producing baseload power from solar power, fell from around $500/Mwh to $200/Mwh over five years. Likewise, the cost of onshore wind fell to around $100/Mwh.
The table below highlights the expected costs (EGC) of the levelised cost of electricity (LCOE) for solar and wind technology in 2010 and 2015.
In comparison baseload power available from natural gas, coal and atomic plants fell marginally to around $100/Mwh in the same time period.
The conclusions drawn from the report show the growing trend in countries moving towards zero-carbon sources, with the report stating: “The vast majority of the technologies included in this study are low- or zero-carbon sources suggesting a clear shift in the interest of participating countries away from fossil-based technologies, at least as compared to the 2010 study.”
The report also said that costs for nuclear technologies have remained relatively stable, “undermining the growing narrative that nuclear costs continue to increase globally.”
However the report doesn’t suggest that one single technology is the cheapest under all circumstances. Many factors such as market structure, environment policy and resource endowments affect the final cost of developments and therefore the cost of electricity generated.
The analysis is based on data for 181 plants in 22 countries including Brazil, China and South Africa. The data highlights the cost for each resource in each country, noting how prices fluctuate depending on climate and other geographical factors.
For instance, in Belgium commercial roof-based solar panels produce power at $230/Mwh compared to Portugal which produces power at $121/Mwh due to greater exposure to the sun.
Renewables catching up
The report appears to backs up recent claims from the Solar Trade Association that solar powered electricity will be cheaper than gas by 2018.
Back in February, Agora Energiewende, a leading German think-tank dedicated to the German energy transition, published a report suggesting that solar energy is emerging as the cheapest energy source. The report Current and Future Cost of Photovoltaics stated that the cost of producing solar power in the UK will have declined to between 4.2 and 10.3p/kWh by 2025, and by 2050 to as low as 2.0 to 7.4p/kWh.
The International Renewable Energy Agency (IRENA) has also backed up this claim by stating, back in January, that renewable energy prices were now competitive with fossil fuels.