Large-scale solar PV is leading the charge as all renewable sources of electricity race towards competitiveness with conventional generation, a milestone that IRENA says is set to be reached by 2020. Noting that the levelized cost of electricity (LCOE) from utility scale solar has fallen by 73% since 2010, IRENA forecasts that cost to half again by 2020.
The impressive numbers were delivered as a part of IRENA’s latest report, Renewable Power Generation Costs in 2017, delivered yesterday on the first day of the 8th IRENA Assembly. The report charts renewable energy project costs globally, plotting the respective learning curves and comparing them to conventional generation sources, such as coal, gas and nuclear.
The IRENA report found that globally the weighted cost of utility-scale solar had fallen to $0.10/kWh for new projects commissioned in 2017. It noted that during two years, record low auction prices had been achieved for PV power plant projects in Dubai, Mexico, Peru, Chile, Abu Dhabi and Saudi Arabia.
IRENA forecasts large-scale solar prices to drop to $0.03/kWh, “given the right conditions”, from 2018 onwards.
Driving the precipitous cost declines were a number of factors. The IRENA report sets out improving technology, competitive procurement, and a “large base of experience, internationally active project developers” as being behind the cost trend.
Setting out the conditions under which low renewable energy project costs have been achieved, IRENA specified six factors. They include favourable regulations and institutional support; low risks regarding the country in which the project is located and in terms of the power offtaker; the presence of a strong engineering base; favourable taxes; low project development costs; and a good renewable resource.
In delivering the report’s findings, IRENA Director General Adnan Z. Amin described the growing number and experience of renewable project developers as, “creating a dynamic and competitive marketplace.”
Addressing regional specific regions, Adnan looked to China and its 50 GW PV installation achievement in 2017, adding that Asia generally was becoming “a very fast-moving market for renewables.”
“China has decided that it cannot continue on a carbon intensive energy pathway,” said Adnan. “China has consistently exceeded its targets for solar and wind… [and is] moving very fast. There is a lot of technical capacity and investment capacity in Asia today that is going to be quite transformative in the coming decade.”
The 8th IRENA Assembly concludes today in Abu Dhabi.