Renewables: The True Costs

Michael Taylor

Senior Analyst

mtaylor@irena.org

Renewable cost analysis at IRENA

Fills an important gap in knowledge

World-class database of costs

Cutting edge analysis, not just data

All sectors covered, not just power

Costing Alliance deepens engagement

Power generation database

3

CSP in the context of the energy transition

4

The energy transition

5

Keeping on track

6

The power sector will lead the way

7

8

9

The Power to Change

Cost Reduction Potentialsfor Solar and Wind

Continued technologyinnovation

Growing scale of markets

Costs will continue to fall for solar and wind power technologies to 2025

Large cost differentials

Policy framework critical to unlocking largest savingsCost reduction drivers are changing

11

Methodology

Top-down learning curve analysis

Detailed bottom-up technology-based analysis

Approaches complement and inform each other

1992

1998

2002

2004

2011

2014

2025

0.10

1.00

10.00

100.00

1 10 100 1000 10000 100000 1000000

Global average module selling price (2015 USD/W)

Cumulative production volume (MW)

2006 c-Si price increasedue to polysilicon shortage

22% price reduction for each doubling of cumulative volume

2006 c-Si price increasedue to polysilicon shortage

22% price reduction for each doubling of cumulative volume

2006 c-Si price increasedue to polysilicon shortage

22% price reduction for each doubling of cumulative volume

- c-Si

- CdTe

2006 c-Si price increasedue to polysilicon shortage

22% price reduction for each doubling of cumulative volume

CONCENTRATING SOLARPOWER

12

CSP: RECENT COST TRENDS

13

The share of total installed costs:Solar field: 39% for PTC plants and 38% for ST plants in 2015.

Shift to molten salt HTF and storage medium for PTC plants could reduce thermal energy storage costs by >40% (share down to 12% by 2025)

For ST plants, the indirect costs are expected to decrease by about three-quarters from 2015 levels.

System cost breakdown of CSP reference plants, 2015 and 2025

Concentrating solar power: installed costs

An LCOErange of between USD 0.14 (at the highest DNI)and USD 0.19/kWh (at the lowest DNI)

CSP levelised cost of electricity sensitivity to DNI for 2015 reference plants

Concentrating solar power: DNI influence

Most of the installed cost reductions will be driven by technological improvements in the solar field elements and by learning effects from larger deployment volumes. Along with industry experience, these factors are expected to reduce the indirect EPC and owner’s costs components.

PTC and ST total installed cost reduction potential by source, 2015-2025

CSP: Cost reduction potential

Significant indirect EPC cost declines are expected for both technologies, although these cost components for ST are, at USD 1 709/kW, around 20% higher in 2015 than for PTC plants. Indirect EPC and owner’s costs together are expected to decrease by about 60% for PTC systems and by about 68% for STs.

cost reductions for CSP plants to 2025

CSP: Indirect EPC & owners costs

The expenditure for the solar field component of CSP plants has the potential to decrease by 23% (USD 52/m2 aperture) and by 28% (USD 41/m2 reflective) for PTC and ST technologies, respectively.

Cost reduction potentials of the solar field component of PTC and ST CSP plants by source, 2015-2025

CSP: Solar field components

By 2025, the per kilowatt hour of thermal energy installed costs for the storage systems of CSP plants could decrease by about 38% for PTCs and by about 17% for ST plants

CSP: Thermal energy storage

For PTCs, major drivers are an increase in the temperature level enabled by the switchover to molten salt as the HTF which accounts for about 13% of the total LCOE reduction. The second important cost driver is the reduction of solar field costs.

For STs, the largest single driver for LCOE reductions is related to gains in the EPC experience. The indirect EPC cost alone is expected to contribute about one-fifth to the overall LCOE reduction potential of towers.

CSP: LCOE reduction potential

In 2015, both trough and tower technologies were in the same LCOE range of about USD 0.15 to USD 0.19/kWh. By2025, the LCOE range could decline to USD 0.09 to USD 0.12/kWh for troughs and USD 0.08 to USD 0.11/kWh for towers.

The levelised cost of electricity of PTC and ST technologies, 2015 and 2025

CSP: LCOE development to 2025

By 2025 the LCOE of CSP plants at 5% WACC could be as low as USD 0.09/kWh for PTC and USD 0.08/kWh for ST. O&M share grows with decline in installed costs and performance gains

Sensitivity of the levelised cost of electricity of PTC and ST plants to variations in the WACC, 2015 and 2025

CSP: LCOE sensitivity to WACC

www.irena.orgmtaylor@irena.org

Cost reductions

to continue

The winners are customers, the

environment and our future