Abu Dhabi, UAE: According to a press communiqué from International Renewable Energy Agency (IRENA), the average costs for electricity generated by solar and wind technologies could decrease between 26% and 59% by 2025. The findings are from the agency’s report titled – ‘The Power to Change: Solar and Wind Cost Reduction Potential to 2025’ – which, the communiqué said, states that, with the right regulatory and policy frameworks in place, solar and wind technologies can continue to realise cost reductions up to 2025 and beyond.
According to IRENA, the report estimates that by 2025, average electricity costs could decrease by 59% for solar photovoltaics (PV), 35% for offshore wind and 26% for onshore wind compared to 2015; in addition, electricity prices for concentrated solar power (CSP) could decrease by as much as 43%, depending on the technology used. By 2025, the report revealed, the global average cost of electricity from solar PV and onshore wind will be roughly 5–6 US cents per kilowatt hour.
Since 2009, the report explained, prices for solar PV modules have fallen by 30% and for wind turbines have fallen roughly between 30% and 40%. Furthermore, it said that with every doubling of cumulative installed capacity, solar PV module prices drop 20% and the cost of electricity from wind farms drops 12%, due to economies of scale and technology improvements.
The report highlighted that for policy makers, cost reductions up to 2025 will depend increasingly on balance of system costs (example – inverters, racking and mounting systems, civil works, etc.), operations and maintenance costs, technology innovations and quality project management. The focus in many countries, the report added, must therefore shift to adopting policies that can reduce costs in these areas.
“We have already seen dramatic cost decreases in solar and wind in recent years, and this report shows that prices will continue to drop, thanks to different technology and market drivers,” said Adnan Z Amin, Director-General of IRENA. “Given that solar and wind are already the cheapest source of new generation capacity in many markets around the world, this further cost reduction will broaden that trend and strengthen the compelling business case to switch from fossil fuels to renewables.”
“Historically,” he added, “cost has been cited as one of the primary barriers to switching from fossil-based energy sources to renewable energy sources, but the narrative has now changed. To continue driving the energy transition, we must now shift policy focus to support areas that will result in even greater cost declines and thus maximise the tremendous economic opportunity at hand.”
IRENA informed that it will be launching several solar-focused publications in the summer, of which, ‘The Power to Change’ and ‘Letting in the Light: How Solar Photovoltaics Will Revolutionize the Electricity System’, will be released at InterSolar Europe, taking place from June 21 to 24, 2016 in Munich.