Rapid deployment and high learning rates for technology “has produced a virtuous circle that is leading to significant cost declines and is helping fuel a renewable revolution,” according to a new global study of renewable power generation costs in 2012 produced by IRENA, the International Renewable Energy Agency. The agency announced it is establishing its global headquarters in the United Arab Emirates during last week’s Abu Dhabi Sustainability Week.
Additions to global wind power generation capacity totalled 41 gigawatts (GW) in 2011, according to IRENA’s “Renewable Power Generation Costs in 2012: An Overview.” That’s in addition to 30 GW of new solar photovoltaic (PV) electricity generation capacity, 25 GW of hydro power, 6 GW of biomass, 0.5 GW of concentrated solar power (CSP), and 0.1 GW of new geothermal power capacity.
“Renewable technologies are now the most economic solution for new capacity in an increasing number of countries and regions,” IRENA concluded upon analyzing the levelized cost of electricity (LCOE) among some 8,000 renewable power projects in its database and related literature. No wonder over 50 percent of all new power plants globally are renewable.
IRENA’s analysts emphasize that while a single global LCOE for the wide variety of renewable energy systems being deployed today offers a general indication of cost trends, attempts to do so entail making numerous substantive, generalized assumptions and somewhat arbitrary choices regarding inputs that can substantially alter results. More generally, “The costs of renewables are very site specific, and resources are distributed unevenly across regions, countries and within a country. There is therefore no single ‘true’ LCOE value for each renewable power generation technology.
Forecasting ongoing declines in equipment costs across the range of renewable energy technology, the report authors go on to focus on the growing share of so-called “soft costs” – those in addition to equipment costs, such as permitting, installation, operations, and maintenance – in the overall cost of deploying renewable power systems, and the need to drive these balance-of-system (BOS) costs lower as rapidly as possible.
Non-equipment costs are also higher in developing countries where transmission lines and roads must be built as part of the project. IRENA report authors see CSP, solar PV, and wind power as having the greatest potential for further cost reductions. Access to affordable financing is another essential factor in the drive towards ongoing renewable energy growth. To this point, access to affordable financing is not yet the norm globally, IRENA report authors find.