Summary for policy makers: Renewable power generation costs





Main Geographic Focus: 


RE&EE Category Taxonomy: 

  • Policy and Strategy
  • Photovoltaic
  • Concentrated Solar Power
  • Wind Power
  • Biomas for electricity and heating
  • Hydropower

File Tag: 

  • Policy
  • Market analysis



Renewable energy will play a key role in the transition to a truly sustainable energy sector, with access to sustainable energy for all. In the past deployment of renewables was hampered by a number of barriers including their high up-front costs. Today’s renewable power generation technologies are increasingly cost-competitive and are now the most economic option for off-grid electrification in most areas, and in locations with good resources, the best option for centralised grid supply and extension. Renewable power generation technologies now account for around half of all new power generation capacity additions
worldwide. In 2011 additions included 41 GW of new wind power capacity, 28 GW of solar photovoltaic (PV), 25 GW of hydropower, 6 GW of biomass, 0.5 GW of concentrated solar power (CSP) and 0.1 GW of geothermal power. This rapid deployment of these renewable technologies has a significant impact on costs, because of the high learning rates for renewables, particularly for wind and solar. For instance, for every doubling of the installed capacity of solar PV, module costs will decrease by as much as 22%. As a consequence crystalline silicon (c-Si) PV module costs have fallen by more than 60% over the last two years to below USD 1.0/watt (W). The increasing size of global renewable markets and the diversity of suppliers has produced more competitive markets for renewable technologies. The following sections of this paper outline the principle findings of the five costing papers on solar PV, CSP, wind power, hydropower and biomass that IRENA released in 2012 and highlight their key insights for policy makers. It is important to note that cost can be measured in a number of different ways and each way of accounting for the cost of power generation brings its own insights. The analysis summarised in this paper represents a static analysis of costs. The optimal role of each renewable technology in a country’s energy mix requires a dynamic modelling of electricity system costs to take into account the many complexities of operating an electricity grid.

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