Global Renewable Power Costs: Onshore wind down to USD 0.06/kWh in 2017
In its latest report on the costs of renewable power generation technologies, Renewable Power Generation Costs in 2017, the International Renewable Energy Agency (IRENA) highlights that renewable power generation costs continue to fall and are already very competitive to meet needs for new capacity.
The chart below, extracted from the report, shows the global weighted average cost of electricity was USD 0.05 per kilowatt-hour (kWh) from new hydropower projects in 2017, USD 0.06/kWh for onshore wind, and USD 0.07/kWh for bioenergy and geothermal – largely on par with fossil fuel-fired power generation cost (USD 0.05-0.17/kWh). Solar photovoltaic (PV), which cost has dramatically decreased from 2010 to 2017, from USD 0.36/kWh to USD 0.10/kWh – an impressive 73% drop – has also become competitive with fossil power, and is cheaper than new nuclear power in developed countries.
Global levelized cost of electricity from utility-scale renewable power generation technologies, 2010-2017
Three key factors are driving costs down: technology improvements (i.e. “learning curve”, e.g. with every doubling of cumulative installed capacity for onshore wind, investment costs drop by 9% while the resulting electricity becomes 15% cheaper), competitive procurement (including auctions which in 2016-2017 delivered onshore wind and solar PV at around USD 0.03/kWh in a number of countries across the world), and global competition (among a large base of experienced, internationally active project developers). Regarding auctions, their success in spurring cost reductions requires a favorable regulatory and institutional framework and an enabling market environment.
And the IRENA expects an even brighter future. It notably forecasts that “By 2020, all the renewable power generation technologies that are now in commercial use are expected to fall within the fossil fuel-fired cost range, with most at the lower end or undercutting fossil fuels.” And it projects that in the next two years global average costs could decline to about USD 0.05/kWh for onshore wind, USD 0.06/kWh for solar PV, and USD 0.06-0.10/kWh for concentrating solar power and offshore wind.