INDUSTRY NEWS

PV and wind power to cost less than fossil fuels by 2030, says Fraunhofer study

28 January 2014



A study from the Fraunhofer Institute for Solar Energy Systems (ISE) in Germany has found that over recent years, the cost of electricity generated from renewable sources has caught up with that from conventional power plants. The study predicted that, by 2030, the cost to produce electricity from photovoltaic (PV) and wind power will be less than fossil fuel plants in Germany.

The Fraunhofer ISE team presented comparative figures for new power plants constructed in Germany, which are based on solar, wind energy and biogas as well as brown coal, hard coal and gas. They analysed the levelised cost of electricity (LCOE) - a way of comparing generation technologies, by considering the sum of all costs that come over its lifetime - from both renewable energy sources and conventional energy technologies.

After evaluating and comparing all of the data, Fraunhofer ISE presented the following outlook: ‘By 2030 the electricity generation costs from PV will decline down to 0.06 - 0.09 euro/kWh. At this value, even small roof-installed PV systems will be able to compete with the higher generation costs in the future from brown coal, hard coal and combined cycle gas power plants,’ said Professor Eicke Weber, director of Fraunhofer ISE. Also, onshore wind technology will be competitive with brown coal in 2020, as the number of full load operating hours will decline and the price of the carbon credits could increase. 

Today, the LCOE from onshore wind ranges between 0.05 and 0.11 euro/kWh. Offshore wind, on the other hand, has much higher electricity generation costs of 0.12 to 0.19 euro/kWh, despite the fact that it has more full-load operating hours. The offshore wind technology still shows a large potential for cost reductions, whereas onshore wind has nearly reached its limit.

The study used the LCOE of new conventional power plants for brown coal, hard coal and natural gas as reference values. Dependent on the number of full load operating hours assumed, of the fuel price and of the price of carbon credits, the LCOE from brown coal presently extends up to 0.053 euro/kWh, from hard coal up to 0.080 euro/kWh and from combined cycle gas power plants up to 0.098 euro/kWh respectively.

‘The cost of electricity generation is not the only decisive factor in determining the competiveness of renewable and conventional energy sources. The upstream and downstream costs also play a major role,’ said Christoph Kost, project head at Fraunhofer ISE. ‘The ambient conditions and the wind availability as well as the financing costs and the risk premium for new power plants all influence the results substantially.’ 

Related internet links

Fraunhofer ISE