• After years of steady cost decline for solar and wind technologies, renewable power is becoming an increasingly competitive way to meet new generation needs.
• For projects commissioned in 2017, electricity costs from renewable power generation have continued to fall.
• Bioenergy-for-power, hydropower, geothermal and onshore wind projects commissioned in 2017 largely fell within the range of generation costs for fossil-based electricity.1 Some projects undercut fossil fuels, data collected
by the International Renewable Energy Agency (IRENA) shows.
• The global weighted average cost of electricity was USD 0.05 per kilowatt-hour (kWh) from new hydropower projects in 2017. It was USD 0.06/kWh for onshore wind and 0.07/kWh for bioenergy and geothermal projects.
• The fall in electricity costs from utility-scale solar photovoltaic (PV) projects since 2010 has been remarkable. The global weighted average levelised cost of electricity (LCOE) of utilityscale solar PV has fallen 73% since 2010, to
USD 0.10/kWh for new projects commissioned in 2017
Three key cost reduction drivers are becoming increasingly important:
1. technology improvements;
2. competitive procurement;
3. a large base of experienced, internationally active project developers.
• Continuous technological innovation remains a constant in the renewable power generation market. With today’s low equipment costs, however, innovations that unlock efficiencies in manufacturing, reduce installed costs or improve performance for power-generation equipment will take on increasing significance.
• These trends are part of a broader shift across the power generation sector to low-cost renewables. As competitive procurement drives costs lower, a wide range of project developers are positioning themselves for growth.
• The results of recent renewable power auctions – for projects to be commissioned in the coming years – confirm that cost reductions are set to continue through 2020 and beyond. Auctions provide valuable price signals about
future electricity cost trends.
• Record low auction prices for solar PV in Dubai, Mexico, Peru, Chile, Abu Dhabi and Saudi Arabia in 2016 and 2017 confirm that the LCOE can be reduced to USD 0.03/kWh from 2018 onward, given the right conditions.