wind power costing 27 nov 2012 at the Energy Talk, London
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Transcript of wind power costing 27 nov 2012 at the Energy Talk, London
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The Renewable Revolution:Wind Power Costs
27 November, 2012
Michael [email protected]
IRENA Innovation and Technology Centre
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Director-General: Adnan Amin
Established April 2011
The intergovernmental RE agency
Mission: Accelerate deployment of renewable energy
Scope: Hub, voice and source of objective information for
renewable energy
Mandate: Sustainable deployment of the six RE resources
(Biomass, Geothermal, Hydro, Ocean, Solar, Wind)
Location: Headquarters in Abu Dhabi, United Arab Emirates
Innovation and Technology Centre IITC, Bonn
About IRENA
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IRENA Membership
Status: September, 2012
IRENA’s 101 Members and 159 Signatories
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Organizational structure
Office of the Director -General
Policy Advisory Services, Capacity Building (PASCB)
Knowledge Management
Innovation and Technology (KMTC)
Innovation and Technology Centre
(IITC)
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IRENA is NOT a:Bank
R&D instituteNGO
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COSTING….
WHY?HOW?WITH WHOM?
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Rationale and goals
• Renewable energy can meet countries policy goals for
secure, reliable and affordable energy and access.
• Lack of objective and up-to-date data
• Economics are a key decision factor
• Cost declines, rapid for some renewables, occurring
• Decision making is often based on:
outdated numbers
opinion, not fact based
• IRENA to strive to become THE source for cost data
• Goals are to assist government decision-making, and fill
significant information gap 6
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Framework
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Where to set the boundaries?
Are costs even available? Prices, or price indicators?
Levelised cost of electricity (LCOE)
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Data Sources
• General information Business journals (eg Photon), consultancies (eg BNEF), industry associations
(eg WWEA, ESTELA, etc.), auctions and tenders (eg Brazil), project design
studies, development banks (e.g. KfW), World Bank, etc......
• Questionnaire: real world project data IRENA/GIZ collaboration
79 projects for Asia and Africa (34 PV, 20 hydropower, 11 wind, 8
biomass, 3 hydbrid and 3 CSP)
7 submissions unusable!
• Data gaps, some assumptions required. Transportation data difficult
to seperate out
• Difficult to define what is a “development project“
• Inconsistencies in the allocation of costs8
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TODAY’S COSTS
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Key findings
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• A renewable revolution is under way
• Dramatic cost reductions for Solar PV, onshore wind
competitive at best sites, CSP has great potential,
hydropower and biomass more mature
• Unpredictable price variations affect policy efficiency
• Renewables now the economic solution off-grid and for
mini-grids
• Data collection poses challenges
• A shift in policy focus will need to come
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Levelised cost of electricity
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Note: assumes a 10% cost of capital
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Wind
• Capacity factors are increasing
(US example)
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• Wind turbine prices declining
(US example)
• The LCOE is coming down
(Brazilian Auctions)
• Onshore wind is now competitive
with fossil fuels in many countries
• Offshore wind is still expensive
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Wind turbine prices
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Sources: LBNL, 2012; BNEF, 2012; IEA Wind, 2007, 2008, 2009, 2010, 2011 and 2012.
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Wind farm total installed costsNon-OECD
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Sources: IRENA Renewable Cost Database
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Wind farm capacity factorsNon-OECD
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Sources: LBNL, 2012 and IRENA Renewable Cost Database
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O&M costs
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The LCOE of windNon-OECD
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2011
US
D/k
Wh
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COST REDUCTION POTENTIAL
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3
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Learning curve for turbinesStrong anomalies in recent years; further
analysis needed
19Source: Bloomberg New Energy Finance, February, 2011
H2 2012
Chinese turbine prices
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The share of O&M in the LCOEof wind power
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Summary of cost reduction potentials
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• Wind is often the most competitive non-hydro RE, LCOE will
continue to decline.
• Will global market prices for turbines converge like PV
modules?
• Operation and maintenance cost can account for a
substantial share of LCOE, cost reduction potential less well
understood.
• Balance of project costs: will these continue to decline as
rapidly as equipment costs?
• Reasons for differences in bottom-up engineering cost
estimates and real world project costs not well understood
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CONCLUSIONS
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Implications of cost declines
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• Rapid, unexpected, cost reductions pose challenges
• Efficient support policies still needed
• An integrated strategy is required
• Policy focus will need to shift, depending on country, in the
near future. Few countries “get” this!
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To Conclude
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• A renewable revolution underway driven by a virtuous circle
• Renewables are THE economic solution for off-grid and mini-grid
electricity projects (PV and small-scale wind, biomass and hydro) and
increasingly for grid-supply
• Wind, and renewables in general, increasingly competitive without
assistance. But typically for best resources -> needs to expand
• Reductions in LCOE of wind will be driven by technology improvements
and capital cost reductions, but are there constraints?
• Renewables will increasingly have to work together
• Analysis will have to shift from LCOE to electricity system costs. Demand-
side is the forgotten resource!
• The quest for better cost data and understanding of differences continues.
Regular updates for PV, CSP and wind will be needed
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Renewables are increasingly competitive, but more needs to be done to fulfill their potential…
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www.irena.org/publications
IRENA is part of the solution
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Additional slides
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Typical installed capital costsand capacity factors
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