International Renewable Energy Agency (IRENA) has released a new policy brief which finds that renewable energy costs are falling fast, and that renewables are the most cost-effective way to generate electricity for the hundreds of millions globally who do not have access to electricity grids.

"Renewable Power Generation Costs" notes that solar photovoltaics (PV) is set to reach grid parity with residential electricity prices in many locations, with costs currently ranging between USD 0.16 to 0.36 per kWh. The report also finds that while currently more expensive, concentrating solar power (CSP) also has potential for cost reduction.

"A renewable revolution is underway," says IRENA Innovation Director Dolf Gielen. "Recent years have seen consistent, sometimes dramatic, falls in the cost of electricity from renewables – making it the cheapest option off-grid, and even on-grid in places with plentiful resources."

"The message is clear: renewable energy today is often the cheapest option to meet rising demand for electricity – even without subsidies. It is also healthier, and better for the environment. A renewable energy future is now bankable, and there are further cost reductions to come."

Decline of PV costs particularly steep

IRENA finds that while levelized costs of electricity (LCOE) have fallen for several technologies, that crystalline silicon PV module costs have fallen particularly sharply, at 60% over the last two years.

The report also estimates that in Germany, the cost of rooftop PV systems has fallen 65% from 2006 to 2012, to only USD 2.2 per watt, making rooftop PV competitive with residential electricity tariffs.

However, islands typically have electricity costs between USD 0.20 and USD 0.55 per kWh, making a range of renewable energy technologies, including PV and CSP, cost competitive.

Thermal storage big advantage of CSP

"Renewable Power Generation Costs" finds that both solar power tower and parabolic trough systems have similar LCOE costs, ranging between USD 0.20 and 0.36 per KWh for parabolic trough systems and USD 0.17 and 0.29 per kWh for solar towers, assuming a 10% cost of capital.

However, LCOE in areas of excellent solar resource may be as low as USD 0.14 to 0.18 per kWh. The report finds that solar towers appear to have a greater potential for cost reductions.

IRENA also finds that adding six hours of thermal energy storage to a CSP plant can double capacity factors, but also increase capital costs significantly.

Wide variations of cost across geographies

The report finds that there is currently a shortage of accurate, up-to-date information on costs of renewable energy, which makes it difficult for governments to accurately assess which technologies are most appropriate for their circumstances.

The report also notes that as costs for individual technologies can vary by a factor of two or more by nation or even by region, that careful analyses of country-specific costs are needed.

2012-11-21 | Courtesy: IRENA; Image: E Solar | solarserver.com © Heindl Server GmbH

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