The cost of solar and wind power in comparison to fossil fuels has fallen this year according to detailed analysis by Bloomberg New Energy Finance.
The research firm’s latest ‘Levelised Cost of Electricity’ update reveals that the costs of the two most prevalent renewable technologies, crystalline silicon PV and wind, have both fallen in 2015, while comparable costs for gas- and coal-fired generation have gone up.
The study compared the levelised cost of electricity (LCOE) – the cost of generating a megawatt hour of electricity, taking into account factors such as capital and finance costs – of various technologies in different parts of the world in the first and second halves of 2015.
BNEF found that the globalised LCOE for solar fell from US$129 to US$122 per megawatt hour in the first half of 2015, while for onshore wind that figure went from US$85 to US$82.
Over the same timeframe, the LCOE of coal-fired generation went from US$66 to US$75 per MWh in the Americas, from US$68 to US$73 in the Asia-Pacific region and from US$82 to US$105 in Europe. The LCOE for combined-cycle gas turbine generation rose from US$76 to US$82 in the Americas, from US$85 to US$93 in Asia-Pacific and from US$103 to US$118 in EMEA.
The LCOE for nuclear increased to US$261 and US$158/MWh respectively in the Americas and EMEA regions, according to BNEF.
Seb Henbest, head of Europe, Middle East and Africa at Bloomberg New Energy Finance, said: “Our report shows wind and solar power continuing to get cheaper in 2015, helped by cheaper technology but also by lower finance costs. Meanwhile, coal and gas have got more expensive on the back of lower utilisation rates, and in Europe, higher carbon price assumptions following passage of the Market Stability Reserve reform.”
At a country level, the BNEF analysis suggests that onshore wind is now fully cost-competitive with gas and coal-fired generation in the UK and Germany, taking into account carbon costs. In the UK, for example, the cost of onshore wind is US$85/MWh compared to US$115 for combined-cycle gas and US$115 for coal.
In China, onshore wind is cheaper than gas – US$77/MWh versus US$113 – but much more expensive than coal, which is US$44/MWh, while the LCOE of PV in China is US$109 in China.
In the US, coal and gas are still cheaper, at US$65 per MWh, against onshore wind at US$80 and PV at US$107.
Luke Mills, energy economics analyst at BNEF, said: “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.
“But onshore wind and solar PV are both now much more competitive against the established generation technologies than would have seemed possible only five or 10 years ago.”