The economics of renewable energy technologies are critical to understanding their potential role in the energy sector, and how quickly and at what cost we shift the energy sector onto a truly sustainable path. Unfortunately, most Governments have not systematically collected the necessary data to track the trends in the evolution -- many would rightly say revolution -- of renewable energy technology costs. The result is that too often misconceptions about costs or out-of-date data have undermined policy effectiveness.
To fill this gap, and ensure that robust policy can be made based on accurate, timely data from a trusted source, IRENA has developed a world-class database of around 15,000 utility-scale renewable power generation projects and nearly three quarters of a million small-scale solar PV systems.
The trends emerging from this data show not only the success of deployment policies in driving down costs, but also what will underpin the transformation of the energy sector in the future.
The cost-competitiveness of renewable power generation has reached historic levels. Biomass for power, hydropower, geothermal and ons**** wind can all now provide electricity competitively compared to fossil fuel-fired power generation where good resources and cost structures exist (Figure 1).
Solar PV module prices in 2015 are 75 per cent to 80 per cent lower than their levels at the end of 2009. Between 2010 and 2014 the levelized cost of electricity (LCOE) of utility-scale solar PV has fallen by half. The most competitive utility-scale solar PV projects are now regularly delivering electricity for just US $0.08 per kilowatt-hour (kWh) without financial support, compared to a range of US $0.045 to US $0.14/kWh for fossil fuel power. But even lower costs are being contracted for 2017 and beyond. A recent tender in Dubai of US $0.06/kWh ably demonstrates this shift, even in a region with abundant fossil fuels.
Ons**** wind is now one of the most competitive sources of electricity available. Technology improvements, occurring at the same time as installed costs have continued to decline, mean that the cost of ons**** wind is now within the same cost range, or even lower, than for fossil fuels. Wind projects around the world are consistently delivering electricity for US $0.05 to US $0.09/ kWh without financial support, with the best projects costing even less.
Concentrated solar power (CSP) and offs**** wind are still typically more expensive than fossil fuel-fired power generation options today, with the exception of offs**** wind in tidal flats. But these technologies are in their infancy in terms of deployment. Both represent important renewable power sources that will play an increasing role in the future energy mix, as their costs will continue to come down.
Costs for the more mature renewable power generation technologies -- biomass for power, geothermal and hydropower -- have been broadly stable since 2010. However, where untapped economic resources remain, these mature technologies can provide some of the cheapest electricity of any source.
Given the installed costs and the performance of today's renewable technologies, and the costs of conventional technologies, the fact is this: renewable power generation is increasingly competing head-to-head with fossil fuels, without financial support.
HOW RENEWABLE ENERGY CAN BE COST-COMPETITIVE. By: AMIN, ADNAN Z., UN Chronicle, 02517329, 2015, Vol. 52, Issue 3