Cost of solar & wind keep falling globally

The global weighted average cost of newly commissioned solar photovoltaic (PV), onshore and offshore wind power projects fell in 2021. This was despite rising materials and equipment costs, given that there is a significant lag in the pass through to total installed costs.

The global weighted average levelised cost of electricity (LCOE) of new onshore wind projects added in 2021 fell by 15%, year-on-year, to USD 0.033/kWh, while that of new utility-scale solar PV fell by 13% year-on-year to USD 0.048/kWh and that of offshore wind declined 13% to USD 0.075/kWh. With only one concentrating solar power (CSP) plant commissioned in 2021, the LCOE rose 7% year-on-year to USD 0.114/kWh.

The period 2010 to 2021 has witnessed a seismic improvement in the competitiveness of renewables. The global weighted average LCOE of newly commissioned utility-scale solar PV projects declined by 88% between 2010 and 2021, whilst that of onshore wind fell by 68%, CSP by 68% and offshore wind by 60%.

See the interactive infographic on how Competitiveness of Renewables Continued amid the Fossil Fuel Crisis.

The benefits from renewables in 2022 will be unprecedented, given the fossil fuel price crisis:

The lifetime cost per kWh of new solar and wind capacity added in Europe in 2021 will average at least four to six times less than the marginal generating costs of fossil fuels in 2022.

Globally, new renewable capacity added in 2021 could reduce electricity generation costs in 2022 by at least USD 55 billion.

Between January and May 2022 in Europe, solar and wind generation, alone, avoided fossil fuel imports of at least USD 50 billion.

The data suggests that not all of the materials cost increases witnessed to date have been passed through into equipment prices. This suggests that price pressures in 2022 will be more pronounced than in 2021 and total installed costs are likely to rise this year in more markets.

https://www.irena.org/publications/2022/Jul/Renewable-Power-…

Jaak

2 Likes

The learning curve and increased production rates have helped both solar and wind.

But they tell us that wind turbines especially are being impacted by inflation. Rising oil prices impact raw materials and transportation. As a result wind turbine companies are reporting losses. Cost increases make deliveries on contracts losers.

This is probably a temporary set back but wind projects are likely to be more like nuclear plants. Final costs are unknown and may be much higher than planned.

Inflation is a killer. How do you sign a contract when you know its virtually a blank check.

Let’s hope control of inflation arrives sooner rather than later.

3 Likes

Inflation and increasing costs of materials and manufacturing impacts all of electrical power generation methods - nuclear, natural gas, coal, renewables, hydro and others.

Which one will see the highest material cost increases?

Which one will see the highest manufacturing cost increases?

Which one will see the highest fuel cost increases?

Jaak

Inflation and increasing costs of materials and manufacturing impacts all of electrical power generation methods

True. What is new is that renewables have joined the club.

From January:
Global inflation threatens to end era of ever-cheaper clean energy
www.japantimes.co.jp/news/2022/01/21/business/inflation-clea…

DB2

3 Likes

But they tell us that wind turbines especially are being impacted by inflation. Rising oil prices impact raw materials and transportation. As a result wind turbine companies are reporting losses. Cost increases make deliveries on contracts losers.

From April:

‘We’re all in trouble’
Wind turbine makers selling at a loss and in a ‘self-destructive loop’
www.rechargenews.com/wind/were-all-in-trouble-wind-turbine-m…
Raw material and logistics inflation coupled with downward price pressures from auctions have led to an unsustainable situation where wind OEMs are selling at a loss, with the sector unable to deliver Europe’s planned tripling of wind capacity by 2030, industry leaders have warned…

After hefty price hikes last year in the wake of the Covid-19 pandemic “things were higher but stabilising,” Hickok said, but added that with Russia’s war in Ukraine, the entire system had “unhinched” again in the past eight weeks, making it unsustainable at an unprecedented level of uncertainty. The GE executive said she is very fearful for the entire wind industry ecosystem…

Nordex chief executive José Luis Blanco stressed that even before the Ukraine war, the economics in the wind industry had been destroyed due to price pressures from competitive tenders coupled with a low visibility of wind capacity pipelines due to failed government policies. “We are still selling at loss, because of the dynamic of auctions, the low predictability of volumes,” Blanco told the conference.
.

Cost cluster-bomb could ‘slow momentum considerably’ in global solar funding
www.rechargenews.com/solar/cost-cluster-bomb-could-slow-mome…
Global solar power sector corporate funding totalled $7.5bn in the first quarter, a 51% increase from fourth quarter 2021 but 7% lower compared with a year earlier, pointing to the prospect of “significant” slow-down in the sector, according to Mercom Capital.

DB2

2 Likes

Inflation and increasing costs of materials and manufacturing impacts all of electrical power generation methods

True. What is new is that renewables have joined the club.

====================================

However, renewables still have the lowest impact from fuel cost increases and the lowest impact on water usage.

Jaak

Inflation and increasing costs of materials and manufacturing impacts all of electrical power generation methods

True. What is new is that renewables have joined the club.

However, renewables still have the lowest impact from fuel cost increases and the lowest impact on water usage.

I wouldn’t be surprised. However, it still doesn’t fit with the thread title.

DB2