Global prices for renewables fell across the board in 2018, IRENA says

Energize Weekly, June 10, 2020

Global prices for new renewable energy fell in 2018 for eight major types of electric generation, according to the International Renewable Energy Agency (IRENA).

Costs between 2017 and 2018 dropped from as much as 26 percent for concentrating solar power (CSP) to 1 percent for geothermal and offshore wind.

“Cost declines across the board in 2018 have reconfirmed the status of renewable power as a highly cost-effective energy source,” Francesco La Camera, IRENA’s director-general, said in the agency’s 2018 renewable energy power generation report.

The report found that “in most parts of the world today renewables are the lowest-cost source of new power generation.”

IRENA measured the average weighted, levelized cost for each type of generation. Levelized cost takes into account the price of building and operating a facility, and divides that by the amount of electricity it generates over its lifetime.

While concentrating solar technology showed the steepest price drop, 26 percent to 18.5 cents a kilowatt-hour (kWh), that was based only a few projects in China, Morocco and South Africa. “Given the relatively thin market for CSP, this rapid drop in 2018 should be treated with caution,” IRENA said.

Total installed CSP in the world at the end of 2018 was about 5.5 gigawatts (GW). While that was more than four times as much as it was in 2010, CSP still has the lowest overall capacity of any of the renewable technologies surveyed by IRENA.

The next largest price drop came in bioenergy, 14 percent to 4.8 cents a kWh. The price decline came as developers shifted to less capital-intensive technologies using agriculture wastes and forestry residues as fuel.

“Bioenergy where low-cost feedstocks are available as by-products from agricultural or forestry processes, can provide competitive electricity,” IRENA said. In 2018, about 7 GW of new bioenergy electricity generation capacity was added worldwide.

Both onshore wind and photovoltaic (PV) solar prices were down 13 percent in 2018. Onshore wind’s average price was 5.6 cents a kWh, and PV solar was 8.5 cents a kWh.

The prices of both technologies have been steadily dropping for more than a decade. At the beginning of 2018, IRENA’s analysis of auction and long-term power contract data forecast the global weighted-average cost of onshore wind electricity in 2020 could fall to 4.9 cents a kWh and PV solar to 5.5 cents a kWh.

A year later, IRENA has dropped its projections to 4.5 cents a kWh for onshore wind and 4.8 cents for PV in 2020.

China with 18.5 GW of new wind power led in installations followed by the United States with 6.8 GW. A total of 45 GW of onshore wind was commissioned in 2018.

About 60 GW of utility-scale PV was installed in 2018 and another 34 GW of residential and commercial rooftop solar was added. The two represented about 55 percent of all the new renewable generation capacity for 2018. The average levelized cost of utility-scale PV was 8.5 cents a kWh, a 77 percent drop from 2010 prices.

The leaders for installed PV were China, 44 GW; India, 9 GW and the U.S. with 8 GW.

After two years of increasing costs, hydropower saw an 11 percent decline in price to 4.7 cents a kWh. On a kWh-basis, hydropower has been consistently competitive as low-cost generation, IRENA said.

The price decline was a result of a sharp drop for projects in Asia. About 21 GW of hydro generation was added in 2018.

Offshore wind and geothermal costs were both down 1 percent from 2017. Only 540 megawatts of geothermal were added at a price of 7.2 cents a kWh, and IRENA said that with such a small capacity addition, it is difficult to discern costs trends.

The offshore sector added 4.5 GW of generation, the same as in 2017, at a cost of 12.7 cents a kWh. China accounted for 40 percent of the total, followed by the United Kingdom with 29 percent and Germany with 22 percent.

While the price decline was modest in 2018, between 2010 and last year, offshore wind costs are down 20 percent.

The cost reductions have been driven by technological improvements including in turbine efficiency, installation and logistics, as well as economics of scale in operation and maintenance, IRENA said.

“Very low, and falling, costs of electricity for solar PV and onshore wind, as well as cost reductions for CSP and offshore wind until 2020 and beyond, make renewable power the competitive backbone of the global energy sector transformation,” the agency said.

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