photo Martien Abegglen
Solar photovoltaics (PV) will be one of the cheapest sources of electricity generation in Europe by 2030. That is a major conclusion that can be drawn from a report on future cost reductions in solar PV recently published by KIC InnoEnergy.
The report is the final one in a series of four in which KIC InnoEnergy analyses future costs of renewable energy sources. The other three are on onshore and offshore wind and on solar thermal electricity. The analysis, based on a methodology (Delphos) developed by UK-based consultancy BVG Associates in cooperation with KIC InnoEnergy, examines in detail how a range of specific elements of PV installations are impacted by a range of technological innovations.
Emilien Simonot
It concludes that technological innovations will bring levellised costs (LCOE) of solar PV down 22-30% by 2030. Combined with other types of cost reduction, e.g. in grid connection and industrialisation processes, the costs of solar PV can be reduced 37-49% by 2030. This will result in a reduction of levellised costs from €77-80 per MWh today to an average of €43-49/MWh in 2030 for ground-mounted PV in Europe, says the report. Rooftop solar PV will be slightly more expensive.
It appears that solar PV is likely to be cheaper in 2030 than solar thermal electricity and also cheaper than both onshore and offshore wind
Emilien Simonot, Renewable Energy Technology Officer at KIC InnoEnergy and coordinator of the report, written by a group of internationally renowned experts on solar PV, says the result is “very positive. It means solar PV will become one of the lowest-cost sources of electricity generation in Europe.” Rooftop PV, he says, “still has some homework to do to get its cost down.”
80%-90% of the anticipated cost reduction in solar PV can be achieved through seven innovations, notes the report, mainly in the area of cell manufacturing for crystalline silicon and module manufacturing for thin films.
KIC InnoEnergy uses the results of the study in the evaluation of cleantech startups in which it invests, says Simonot. “We always want to know what impact the startup companies are expected to make. This makes it possible for us to compare their information with market data. This is also useful for the entrepreneurs themselves. For them it’s also difficult to get the full picture.” Investors, analysts and policymakers can also consult the data, which are all published on the KIC InnoEnergy website.
“We still have a good technology base, but no manufacturing industry anymore to transfer the results to. How can we maintain leadership if we have no industry?”
From the series of four reports it appears that solar PV is likely to be cheaper in 2030 than solar thermal electricity and also cheaper than both onshore and offshore wind. KIC InnoEnergy’s analysis of onshore wind shows possible cost savings of just 5.5% over the next 15 years, resulting in LCOE’s ranging from €60/MWh to over €90/Mwh. The costs of offshore wind are likely to be reduced by 27%, leading to LCOE’s of between €90 and €160 per MWh. Solar thermal has the highest anticipated costs – between €130 and over €200 per MWh – despite cost reductions of almost 29%.
Although the prospects of solar PV look good from a cost perspective, Simonot notes that Europe should be concerned about recent declines in investment in the renewable energy sector in Europe, in particular compared to China. “We still have a good technology base and important R&D centres in solar technology, but no manufacturing industry anymore to transfer the results to. How can we maintain leadership if we have no industry?”
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I don’t like generalisations – with RES one needs specifics & locational specifics.
“from €77-80 per MWh today to an average of €43-49/MWh in 2030 for ground-mounted PV”
Really? Med’ basin PV gorund mount does Euro50/MWh – right now.
Wind: West Cost Scotland: Euro30/MWh – right now.
Off-shore? hmm, I see the writers have (not) been studying the results of Danish off-shore auctions: let’s see – the latest on-going round sets a max bid price of Euro94/MWh with LCOEs looking much more like Euro70.
Generalisations in the case of RES are much worse than just mis-leading – they give policy makers the wrong ideas.
Agree on most comments but as always devil’s in the detail. Our work mainly focus on what technology innovations can do to reduce LCOE in the next 15 years, analysing impact of concrete innovations. Of course, location, iradiance, cost of capital and so on are other key parameters that contribute largely to LCOE reduction.
Identifying those innovation is not only answering how cheap can PV become, but also where the opporutnities are for our research and our industry, giving policy makers the right insights.
Emilien
Solar in Denmark is now €0.05/kWh on utility scale, which is in the top range of what you expect to be possible by 2030.
Vestas has lowered the average sales price per MW by 9% annually for the last two years and consider this to be a stable trend and have in the same period improved on every financial metrics.
The average unsubsidized US 20 year wind PPA in 2014 was $0.035/kWh. PTC is going to be phased out by 2021. Assuming that turbines continue to become cheaper at the current rate then new wind in US will be $0.018/kWh by 2021.
Or put in an other way by 2021 nine years before 2030 a major wind energy market will source wind energy on average 75% cheaper than your lowest guess by 2030.
Also two years ago the average US wind PPA contract that only covers 80% of expected designlife was already less than 50% of the lowest cost you expect for wind by 2030.
If you somehow are able to explain yourself it would be much appreciated.
1. LCOE calculation of intermittent energy source without needed storage or back-up (which will turn them effectively into demand responsive) above a certain market penetration is pointless. The reason is, low capacity factor of intermittent energy sources drags down the capacity factor of the whole system. Without storage, solar, and specially wind have reached their glass ceilings in countries like Germany, Spain, Denmark and cannot be developed further.
2. PV, as we know it, have much to low efficiency, to be effectively scaled up to make any significant impact. Even IEA predicts for 2050 only 16% electricity generation from PV. Even in most optimistic scenario, solar cannot make it beyond 10% of global final energy demand till 2050. The truth is, sun is our only true option, to go completely renewable, but not with PV as we know it. What matter is real life efficiency, and that is with performance ratio 0.9-0.8 even for best performing bellow 18% efficiency. What we really need is 50% electricity and 50% thermal from non-concentrated solar panel.
2. According to Max Planck institute study, surface power density for large wind farms can drop to as low as 1W/m2, since turbines in large farms don’t influence only each other, but overall wind paterns as well, impacting even the climate. Harvard university study came to similar conclusions. Which makes currently wind potential grossly overestimated. It seems, it will be vary difficult to substantially scale-up wind much more beyond current levels. https://www.mpg.de/9389067/wind-energy-wind-electricity
There’s a Harvard university study, coming to similar results. https://www.seas.harvard.edu/news/2013/02/rethinking-wind-power
So, stop the hype and get first your math and physics straight…we have to save the climate, but being delusional surely won’t help…
IEA is proven grossly incorrect inPC predictions, see how bad their predictons are in https://en.wikipedia.org/wiki/Growth_of_photovoltaics.
In 2015 more than 55 GW PV was installed and even more is predicted to be installed this year. To say that these numbers have no impact – well why don’t you look at the daytime spot prices in Germany, Italy, Australia or California?
55GW?…wow, really?…now, that will make all the difference…That’s nothing!…at rather optimistic average capacity factor of roughly 0.15 that’s just 8.25GW!…And final global power demand is what…12TW?…global electric power demand alone is almost 2.3TW…and rising…and now do the math, it’s not that hard… it is a whooping 0.36% of electricity demand in 2015!…At that rate it’ll take 28 years just to reach 10% mark…and than you can start all over again replacing the old panels with the new ones…And spot prices you mentioned…You better not get me even started with that joke…They just prove, how distorted the market really is…and who do you think pays for it?…That’s right, the customers!…Specially in Germany, with electricity rates at 30ct/kWh…And they are not laughing… So, what do you think, where does this comes from?
Installation rates for PV are not constant, they have been growing year by year. Since PV is getting cheaper by the day this growth will continue and it is therefore a bit silly to work with such a constant number.
economics is more important . One example
https://www.kpmg.com/IN/en/IssuesAndInsights/ArticlesPublications/Documents/ENRich2015.pdf
PV and storage is on par in Australia. I think that same situation is in Cyprus and Hawaii. With targeted 100 USD/kWh for battery in 2020 (now at cca 300 USD/kWh), it will be competitive in less sunny countries like central Europe
PV +storage has potential to disrupt the whole energy structure like mobile phones against fixed line. Especially in developing counties with insufficient grid.
And what is with integration costs of RES? One research about this.
https://www.agora-energiewende.de/en/press/agoranews/news-detail/news/integration-costs-for-renewable-energy-controversial-but-likely-low/News/detail/
No, on macro-economic level, economically sustainable scalability is the key…on microeconomic level, only as far as self-consumption goes on very few places in the world, and only that as far as we are dealing with sunny and reach…but in poor and sunny (e.g. India), or not so sunny and particularly eastern Europe, no go!…Let’s not forget, German electricity rate for consumer is 30ct/kWh. And they have the nerve to talk about additional cost?…How many countries even in EU can afford that…What are those additional costs. On top of German already absurdly high or normal EU prices. Even that is not clear. So yeah, I know Agora, they’re pure political spin!…and having background in engineering, I can’ take them seriously…
Also in this “research” key data is missing, no sources, no methodologies are presented, etc. References are just thrown at the back without any connection to the text itself. Even Wikipedia has higher standards!…In this way, they could write pretty much anything…Agora seems to be a pure political PR service for “Energiewende” and doesn’t look very credible source of information to me…
The 30cnt/kWh is mostly tax. As with car fuel which costs also much more than in USA.
Part is energy tax which is levied with the idea that it stimulates people to be careful about energy. And government needs the income anyway…
It may astonish you, but the av. German household spends a lower share of its income on the electricity bill than the average US household.
Apparently German population consider the 6cnt/KWh Energiewende levy in the 30cnt insignificant, as ~90% supports the Energiewende. Though it’s the max.
Merkel promised that it wouldn’t rise significantly.
So the Feed-in-Tariffs for solar, etc. are reduced in order to bring the transition speed back towards the speed of the original Energiewende scenario, which delivers >80% renewable in 2050.
Apparently Germany cannot afford the much higher transition speed of Denmark.
The Energiewende levy is widely expected to go down after 2022 as then the 20yrs guaranteed high FiT’s of the first years end (50-70cnt/KWh for solar to create the mass market to bring the costs down. It’s now 7-13cnt).
It also implies that there will be space for new developments such as heat pumps and/or micro P2G installations for households. So other energy consumption becomes more renewable too.
Did you read the atached links? What 30 EURct/kWh price of electricity? Just look at this, if you dont read the KPMG study
https://www.lazard.com/media/2390/lazards-levelized-cost-of-energy-analysis-90.pdf
(especialy page 3) And you can compare the development. Lazard makes these calculation since 2009. Costs of PV and Wind constantly decrease, fossil is stagnating.
You will be suprised that, by the PwC poll, electric utilities consider PV as a second biggest factor, after energy efficiency, that jeopardizes their tradititional business model.
So that´s the reason why they establish new RES divisions
Do you know what is the problem of many poor and sunny countries. Highly subsidied electricity for end customer, that dont allow make economic investments in generation capacity and grid. So the results is insuficient energy capacity, mimimal investment to the grid and frequent blackouts. Irronicaly Germans have one of the most reliable grid in the world And that is kept again very high share of intermitent RES capacity.
@Rok,
The Agora report summarizes many studies. It uses annotation numbers for footnotes. At the end the 4 pages with references are ordered by chapter, with a separate page for the 33 scenario’s used to calculate integration costs.
The lay-out is standard for printed reports towards top-management. As they should read it, it’s short and easy to read.
They explain the used methodology, etc. in a webinar with PPT and Q&A.
The fact that Hirth, whose studies showed very high integration costs, is stated (so he agreed) as advisor also shows that they took the whole range into account.
It’s also showed in the text. E.g. from the key findings:
“…the utilization effect, … the key cost driver … is the reduced utilization of other power plants, increasing their specific generation costs. While this cost includes the need for more backup capacity, it incurs … controversial calculations, leading to results that may range between -6 and +13 EUR/MWh, even when the same system is considered at a penetration rate of 50 percent wind and solar”.
Im says
When the Gigafactory reach the planned production capacity it will in one year produce as much battery capacity as humanity has done since Volta.
At that time the Gigafactory will produce about a minute worth of storage capacity for the global electric grid.
If you want say two days of storage capacity to ensure that supply and demand meet (probably a very low guess), then the Gigafactory has to run at full capacity for 2880 years.
Grid scale battery storage is a part of a hype curve and moreover it is not needed now, not in the near future and certainly not in any remoter future.
Where battery storage makes sense behind the meter, for mission critical purposes and for grid deflectors.
Wow Rok. That was a lot of frustration.
If wind power continue the four decades long trend where the installed capacity is seven fold after every decade then wind power will produce as much energy as the globe did in 2014.
To put into perspective this will require 660.000 Vestas 164 turbines.
The shallow areas of the North Sea will suffice to produce the electricity needed for all Europeans including electrification of the car fleet.
Max Planck and Harvard has a lot of researchers so please do not take notice of the obvious ignorants.
Currently there is more than 300.000 plus MW turbines in operation globally.
Incidentally PV is also on track to deliver as much electricity as the world produced in 2014 and will reach that point slightly ahead of wind.
There is no such thing as a glass ceiling for wind because windpower is approaching a price point where electricity from wind combined with excess CO2 becomes a cheaper source for the petrochemical industry than crude oil.
The research you refer to is about extremely large wind farms that will never be realised in real life.
The limits to installed windpower have also been done by researchers from Stanford University and Delaware University using a more refined model. They also find that there is a limit, but that this limit is way above the installed power that we need:
http://news.stanford.edu/news/2012/september/wind-world-demand-091012.html
Although with the right intention -promoting development of european PV industry-, the message could be misleading for several reasons:
1- combining PV (electricity) and solar thermal collectors (heat) is lower cost and more efficient than installing oversized home PV systems for electricity and heat production,
2- generating electricity with a PV system requires to combine either with ancillary systems (e.g. HVAC / heating), storage systems (e.g. batteries in BEV), or connection to microgrids,
3- ignoring the need of scaled-up storage systems (e.g. hydro PSP, batteries, biogas, hydrogen…) for large-scale PV systems would be like sawing the branch on which one is sitting,
4- valuing complementarity / interdependence btw. various RE sources would be more productive than fierce competition: it does not make sense to install PV systems where regular winds are blowing but clouds are the daily bread, or a windfarm where the sun is shining but irregular winds, not to mention a hydropower plant in the desert…
Looking into the study it seems they only estimated the cost decrease by technology improvements, etc., which may explain their low cost decrease prediction of only ~4%/a.
Others assumed that half of the 8%/a price decrease since 1980 is caused by the increasing market size (=more automated production, etc).
So the real price decrease may turn out to be substantial bigger.
Similar may explain their low price decrease estimations for wind.
In my view, these figures are strongly underestimating the potential. In the xGWp European Gigawatt Factory initiative which I have coordinated until last autumn, we have calculated LCOEs of 6ct/kWh in central Europe and <5ct/kWh in southern Spain for the Meyer Burger heterojunction technology in 2018 – an existing technology which needs to be scaled up in a large factory and has further cost-reduction potential. In the context of declining PV markets in Europe no investor was ready to invest in the necessary large-scale production – several claimed that a bigger jump in costs would be required for justifying the risk. Probably, other continents will win the race in this round. But we are aware of much cheaper technologies that will follow – long before 2030.
In the meantime, microgrid and storage technologies will dramatically drive down costs for compensating PV power fluctuation and provide increasing incentives for at least partial self-supply. Public power supply must be very cautions to remain competitive with the new stand-alone alternatives and provide intelligent approaches for integrating distributed generation in a low-cost optimized multi-level public system with distributed responsibilities. Still prevailing approaches for maintaining central control are far too expensive.
the biggest cost for wind and solar is not the hardware but the interest rate of the loan .of course that in eu is subsidized and is near 0 but every
where is around 6-7% unless the company doing installation is from EU and country has above average credit rating