January 14, 2018 - A new cost analysis from the International Renewable Energy Agency (IRENA) predicts that all renewable energy technologies will be able to compete with fossil fuels on price by 2020.
Renewable Power Generation Costs in 2017 states that competitive procurement practices together with the emergence of a large base of experienced medium-to-large project developers competing for global market opportunities are new drivers of recent cost reductions, in addition to continued technology advancements.
“Turning to renewables for new power generation is not simply an environmentally conscious decision, it is now – overwhelmingly – a smart economic one,” says Adnan Z. Amin, IRENA Director-General. “Governments around the world are recognizing this potential and forging ahead with low-carbon economic agendas underpinned by renewables-based energy systems. We expect the transition to gather further momentum, supporting jobs, growth, improved health, national resilience and climate mitigation around the world in 2018 and beyond.”
Global weighted average costs over the last 12 months for onshore wind and solar PV now stand at USD 6 cents and USD 10 cents per kWh respectively, with recent auction results suggesting future projects will significantly undercut these averages. The report highlights that onshore wind is now routinely commissioned for USD 4 cents per kWh. The current cost spectrum for fossil fuel power generation ranges from USD 5-17 cents per kWh.
The report highlights that auction results are signaling that offshore wind projects commissioned in the period between 2020-22 will cost in the range of USD 6-10 cents per kWh, supporting accelerated deployment globally.
In comparison to onshore wind projects, offshore wind farms have significantly higher lead times. Planning for offshore wind farms is more complex and construction even more so, increasing total installed costs. Given their offshore location, they also have higher grid connection and construction costs, and operation and maintenance costs are also higher for offshore wind than for onshore wind.
Yet, on average, offshore wind projects harvest more energy than onshore wind projects, notably in Europe, due to the availability of better wind resources, less turbulence and steadier winds, overall. Cost reductions begun to be unlocked as the industry increasingly standardized turbines and industrialized manufacturing processes. Installation methods and offshore construction vessels have also became more sophisticated and more efficient, reducing the time, and hence costs, of installation.
Source: Maritime Executive