A new report from the International Energy Agency (IEA) shows renewables can generate electricity at close to or even below the cost of new fossil fuel-based power stations.
“Projected Costs of Generating Electricity: 2015 Edition” shows the levelised cost of electricity (LCOE) in several countries for various generation technologies, based on three discount rates.
The analysis is based on data for 181 plants in 22 countries. Technologies covered include natural gas, coal, nuclear, solar PV, solar thermal, offshore and onshore wind power, hydro, geothermal, biomass/biogas and combined heat and power.
The IEA says the cost of renewable technologies, particularly solar PV, have reduced significantly over the past five years and that these technologies are no longer ” cost outliers”.
“While the costs of renewable technologies in some higher priced markets can be well above that of coal- or gas-fired plants, the report details how utility-scale solar PV and especially onshore wind power are comparable and often lower in countries featuring plentiful resources and appropriate market and regulatory frameworks,” says the IEA.
The IEA stresses no single technology can be said to be the cheapest under all circumstances. Market structure, policy environment and resource availability continue to play an important role in determining the final levelised cost of electricity.
Another important point – not included in LCOE calculations were transmission and distribution costs, nor do they include other systemic costs or externalities beyond carbon dioxide emissions. These externalities can be significant when it comes to fossil fuel based power generation.
Earlier this year, a Duke University study found that with environmental and health impacts factored in, solar power is far less costly than coal-fired electricity generation – more than two-thirds cheaper in the USA.
A 2013 study found the average economic value of health impacts in the US associated with PM2.5 and PM2.5 precursors (NOx and SO2) in fossil fuel usage to be USD $140 – $350 MWh.
Closer to home, a 2012 briefing paper prepared by the Climate and Health Alliance (CAHA) and The Climate Institute says coal-fired power in Australia was costing the nation $2.6 billion annually in terms of health.
A detailed Executive Summary of Projected Costs of Generating Electricity: 2015 Edition can be viewed here (PDF).
