Production Cost Of Renewable Energy Now ‘Lower’ Than Fossil Fuels
For the first time in history, the production cost of renewables is lower than that of fossil fuels, an industry asset manager has claimed.
In a recent note to its clients, Hamburg, Germany-based Kaiserwetter Energy Asset Management, wrote that its “internal analysis” – based on data from Bloomberg, The Frankfurt School, Renewable Cost Database of the International Agency for Renewable Energy (IRENA) and UN Environment – puts fossil fuels generated energy costs in the range of $49 and $174 per MWh (Megawatt hours) in G20 energy markets in 2017.
Over a comparable period, renewable energy production came in between $35 and $54 per MWh. Breaking the data down further, Kaiserwetter said the international average cost for hydroelectric projects were more than $50 per MWh, wind power was $51 per MWh, and photovoltaic solar energy was $54 per MWh on average.
A wind turbine in Reichenbach, Germany. (Photo: Florian Gaertner/Photothek / Getty Images)
Furthermore, it also claimed that renewable energy presents the best alternative to the high cost of nuclear power as well, as governments attempt the decarbonization challenge.
Flagging the U.K. as an example, Kaiserwetter said it is one of only 14 countries worldwide which continue to construct nuclear power plants, such as the Hinkley Point Reactors, which cost around £19 billion ($26 billion) in construction and around £92 ($129) per MWh in electricity generation.
To arrive at its conclusion, the asset manager grouped the costs of 15,000 utility projects and calculated the risks that investors will assume across 54 countries between 2020, 2025 and 2030.
Total electricity generated from renewables in 2017 increased by 18.8% in 2016, from 83.2 TWh to a record 98.9 TWh. Normalized renewable generation rose from 87.1 TWh in 2016 to 97.8 TWh in 2017.
And the latest photovoltaic energy auctions in Dubai, Mexico, Chile, Abu Dhabi or Saudi Arabia, and onshore wind energy in Brazil, Canada, India or Morocco in 2017 suggested that the standard cost of energy can be reduced to $30 per MWh from 2018, Kaiserwetter said.
“However, onshore wind energy has already achieved similar costs in projects across Brazil, Canada, Germany, India, Mexico and Morocco, already reaching $30 MWh.”
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