Wind, solar power becomes cheaper in 2015, closes in on fossil fuels

The global average levelised cost of electricity (LCOE) for both onshore wind and crystalline silicon solar photovoltaics (PV) has decreased in 2015 thanks to the cheaper technology and lower finance cost.

To be more specific, the LCOE for onshore wind has declined to USD 83.00 (EUR 74.20) per MWh in the second half of the year from USD 85.00/MWh in the first six months, while that for crystalline silicon PV went down to USD 122.00/MWh from USD 129.00/MWh, shows a new report by Bloomberg New Energy Finance (BNEF).

The research firm noted that levelised costs take into consideration the cost of electricity generation, the upfront capital and development expense, the cost of equity and debt finance, as well as operating and maintenance (O&M) costs. BNEF has determined that onshore wind in the UK and Germany is now fully cost-competitive with both gas-fired and coal-fired generation, when taking into account carbon costs. At the same time, in China, onshore wind is cheaper than gas-fired power, but much more expensive still than coal-generated electricity.

When it comes to other popular renewables, offshore wind’s LCOE has also gone down to USD 174.00/MWh from USD 176.00/MWh, while biomass incineration levelised cost remained steady at USD 134.00/MWh.

These declines in the cost of renewable energy generation come at a time when both coal-fired and combined-cycle gas turbine generation have become more expensive in certain regions.

"Generating costs continue to vary greatly from region to region, reflecting influences such as the shale gas boom in the US, changing utilisation rates in areas of high renewables penetration, the shortage of local gas production in East Asia, carbon prices in Europe, differing regulations on nuclear power across the world, and contrasting resources for solar generation,” said Luke Mills, analyst, energy economics at BNEF.

(USD 1.0 = EUR 0.893)

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