Cost Competitiveness: Wind And Solar Closing The Gap With Fossil Fuels

2015 has brought about a significant shift in the generating cost comparison between renewable energy sources and fossil fuels, states a October 2015 analysis by technology and region, published by Bloomberg New Energy Finance.

The report titled - Levelised Cost of Electricity Update for H2 2015 - shows that the costs of onshore wind and crystalline silicon photovoltaics, two of the most popular renewable sources have reduced, while they have increased for energy from gas and coal-based technologies.

The study further states that the global average levelised cost of electricity generated by onshore wind projects have also declined from approx $85/per MW/hour in the first half of the year to about $83 in H2, while the prices of crystalline silicon PV have also fallen from a high of approx $129 to about $122.

In the same period, the LCOE for coal-fired generation increased about $66 per Mwh to approx $75 (in the Americas), $68 to $73 in the Asia-Pacific (APAC) region while Europe saw a rise from $82 to $105rom approx $76 to $82 in the Americas

In a similar vein, the LCOE for energy generated from combined-gas turbines also increased from about $76 to $82 in the Americas, $85 to $93 in the APAC, with the EMEA clocking an increase from about $103 to $118.

LCOE’s include not just the cost of generating a marginal MWH of power, but also development and capital expenses paid upfront and the costs incurred towards operating, maintenance, equity and debt finance.

Offshore wind reduced its global LCOE from approx $176/perMWh to about $174 – which is still higher than other low carbon technologies like wind and solar PV and even conventional fuels like coal and gas. Biomass incineration, on the other hand, saw its LCOE at a constant of about $134/per MWh.

Nuclear energy, like coal and gas has very different LCOE levels which differ for one region to the other. However the Americas, Europe, Middle-East and Africa have all seen an increase in levelised costs from $261 to approx $158 per MWh respectively.

The highlights of the country-level findings of the BNEF study reveal that onshore wind is now on par with power generated from gas and coal-based sources in terms of its cost-competitiveness in the UK and Germany, once carbon costs are included.

In the United Kingdom, for example, onshore wind cost approx $85 per MWh in the later half of this year, vis-a-vis about $115 for gas and coal-fired power generation. In Germany, onshore wind is about $80 as compared to $118 and $106 for gas and coal respectively.

In other countries like China, onshore wind is still cheaper at $77 per MWh as compared to gas-powered ($113) and solar PV power ($109), but coal-generated energy is still the cheapest at approx $44 per MWh. Similarly coal and gas are way cheaper in the US at about $65 per MWh when compared to prices of onshore wind ($80) and solar PV ($107).

Having said that, both onshore wind and solar energy projects are much more competitive now against conventional energy generation technologies then would have seemed possible only five or 10 years ago.

In line with the honourable Prime Minister Mr. Narendra Modi’s clean energy initiatives, Welspun Renewables is committed to establishing mega renewable capacities across India.

Solar power generation and energy storage can contribute to India’s long term energy security and help achieve its climate change objectives.