Rapid cost development of clean energy technologies

Accelerated climate protection is a declared goal of the “Glasgow Climate Pact” adopted at the weekend. A new study by economists at the University of Mannheim now shows that the costs of clean energy sources and storage such as solar modules, batteries or renewable hydrogen are falling much faster than previously thought.

The cost of clean energy sources is a key driver for the success of the energy transition. Accordingly, the US government recently announced its intention to halve the cost of solar energy by 2030. At the same time, the cost of clean, renewable hydrogen is also expected to drop by 80 percent, making it competitive with natural gas.

But are these goals achievable in the short time available? The research team of the Mannheim Institute for Sustainable Energy Studies (MISES) has investigated this question in a new study. The result: Continuous improvements of currently available technologies should be sufficient to achieve the targeted cost reductions. In contrast, technology breakthroughs do not seem necessary. The reason for this positive forecast is that the costs for wind and solar plants as well as the production of green hydrogen have fallen faster in the past decade than previously assumed.

“The energy transition is a mammoth task. But we can achieve many of our goals with the existing technologies – provided we expand these technologies quickly and widely,” states the study’s co-author Rebecca Meier.

Together with the economists Prof. Stefan Reichelstein, Ph.D. and Prof. Dr. Gunther Glenk, she analysed the development of the purchase prices of solar modules, wind turbines, batteries and electrolysers. On this basis, the researchers investigated how the costs of producing clean electricity from solar and wind energy have developed and at what rate the production costs for renewable hydrogen have fallen.

The researchers used a proven method as the basis for the calculation: Theodore Paul Wright’s learning curve concept from 1936. The concept describes the observation that the unit cost of a product often falls by a constant factor with each doubling of the cumulative number of units produced of the product.

“Each unit of clean energy source installed provides learning experiences that lead to cost reductions for the technology, which in turn lead to further expansion. Such cycles decisively drive the speed of the energy transition. However, they must be triggered by initial investments and must not subsequently be slowed down by contrary political measures,” concludes Glenk.

Download the study