© Fraunhofer ISE

Study on elec­tric­i­ty pro­duc­tion costs: Renew­able ener­gies clear­ly supe­ri­or to con­ven­tion­al pow­er plants

Researchers at the Fraun­hofer Insti­tute for Solar Ener­gy Sys­tems ISE have pre­sent­ed the fifth edi­tion of their study on the cost price of elec­tric­i­ty from renew­able ener­gies. In it, they analyse cur­rent costs and fore­cast fur­ther devel­op­ments on the basis of tech­nol­o­gy-spe­cif­ic learn­ing rates and mar­ket sce­nar­ios up to the year 2040.

“Wind pow­er plants and solar pow­er plants in Ger­many now have sig­nif­i­cant­ly low­er elec­tric­i­ty pro­duc­tion costs than con­ven­tion­al pow­er plants. Due to the ris­ing costs for CO2 cer­tifi­cates, even the oper­a­tion of exist­ing con­ven­tion­al plants pow­ered by coal and gas will become less and less com­pet­i­tive in the com­ing years,” says project man­ag­er Dr. Christoph Kost.

Due to the inten­si­fied efforts to pro­tect the cli­mate, the costs of oper­at­ing con­ven­tion­al pow­er plants are ris­ing on the one hand, while on the oth­er hand the elec­tric­i­ty gen­er­a­tion costs of pho­to­volta­ic pow­er plants in par­tic­u­lar have con­tin­ued to fall com­pared to the last study in 2018. PV sys­tems cur­rent­ly achieve elec­tric­i­ty pro­duc­tion costs of between 3.12 and 11.01 €Cent/kWh, depend­ing on the type of sys­tem and solar radi­a­tion. The spe­cif­ic sys­tem costs range from 530 to 1600 €/kWp, depend­ing on the sys­tem type.

Since PV bat­tery sys­tems rep­re­sent a grow­ing mar­ket in the Ger­man elec­tric­i­ty sys­tem, they were includ­ed in the com­par­i­son for the first time in this study. The elec­tric­i­ty pro­duc­tion costs for PV bat­tery sys­tems today range between 5.24 and 19.72 €Cent /kWh. The wide range results from high cost dif­fer­ences between the dif­fer­ent bat­tery sys­tems. The use of bat­tery stor­age also adds val­ue by con­tribut­ing to sys­tem secu­ri­ty in the elec­tric­i­ty sys­tem and sta­bi­liz­ing the feed-in curves and bat­tery dis­charge in hours of high demand.

In the case of wind pow­er, falling plant costs lead to prime costs of 3.94 to 8.29 €Cent /kWh for onshore wind tur­bines, mak­ing them the sec­ond cheap­est gen­er­a­tion tech­nol­o­gy. Despite high­er aver­age full load hours of up to 4500 hours/year, off­shore wind tur­bines are sig­nif­i­cant­ly more expen­sive at just under 7.23 to 12.13 €cents/kWh, due to high­er instal­la­tion, oper­at­ing and financ­ing costs (3000 to 4000 €/kW). Poten­tial new con­ven­tion­al pow­er plants in Ger­many do not come below an LCOE of 7.5 €Cent /kWh, tak­ing into account high­er CO2 costs.

Fore­cast of elec­tric­i­ty pro­duc­tion costs until 2040

Through fur­ther tech­no­log­i­cal advances, PV sys­tems (includ­ing rooftop sys­tems) and wind tur­bines in windy loca­tions will sig­nif­i­cant­ly under­cut the aver­age elec­tric­i­ty pro­duc­tion costs of all fos­sil-fuel pow­er plants by 2040.
In 2040, the LCOE is pro­ject­ed to range between 3.58 and 6.77 €Cent /kWh for small rooftop PV sys­tems and between 1.92 and 3.51 €Cent /kWh for ground-mount­ed sys­tems. From 2024 onwards, the LCOE of all PV sys­tems (with­out bat­tery stor­age) will be below 10 €Cent /kWh.
PV sys­tem prices are expect­ed to fall to below €350/kW by 2040 for ground-mount­ed sys­tems and up to between €615 and €985/kW for small-scale systems.
In 2030, elec­tric­i­ty gen­er­a­tion from a PV bat­tery sys­tem could then be cheap­er than from a com­bined-cycle gas tur­bine (CCGT) pow­er plant. By 2040, even small PV bat­tery sys­tems will be able to achieve elec­tric­i­ty pro­duc­tion costs of between 5 and 12 €Cent /kWh.

New­ly installed PV and wind plants cheap­er than exist­ing con­ven­tion­al pow­er plants from 2030 onwards

The research team at Fraun­hofer ISE addi­tion­al­ly com­pares the elec­tric­i­ty pro­duc­tion costs of new RE pow­er plants with the oper­at­ing costs of exist­ing con­ven­tion­al pow­er plants. It can be seen that in 2021 the elec­tric­i­ty pro­duc­tion costs of renew­able ener­gies will be on a par with the oper­at­ing costs of con­ven­tion­al pow­er plants, if not low­er. By 2030, how­ev­er, all exist­ing fos­sil-fuel pow­er plants will still have sharply ris­ing oper­at­ing costs. This is due to fore­casts that indi­cate a CO2 price of over 100 €/t in 2030. “This means high mar­ket dynam­ics in terms of invest­ment in new renew­able pow­er plants, as com­pa­nies will pre­fer to invest in new RE plants rather than bear these high oper­at­ing costs. How­ev­er, it must also be ensured that suf­fi­cient areas and pow­er plant capac­i­ties are avail­able for wind and PV,” says Christoph Kost.

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