Cost Overview

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Table 5.6 provides an overview of cost estimates for renewable electricity generation technologies. There is a wide range of costs for each renewable technology due mainly to varying resource quality and to the large number of technologies within each category. Investment includes all installation costs, including those of some demonstration plants in certain categories. Discount rates vary across regions. Because of the wide range in costs, there is no specific year or CO2 price level for which a renewable energy technology can be expected to become competitive. A gradual increase in the penetration of renewable energy over time is more likely. Energy policies can speed up this process by providing the right market conditions and to accelerate deployment so that costs can be reduced through technology learning.

Technology learning in bioenergy systems has been studied using experiences in Denmark, Finland, and Sweden [9, 10]. In the supply chain, learning rates for wood fuel-chips are 12-15%. For energy conversion in biogas or fluidized bed boiler plants, available data are much more difficult to interpret. An average learning rate of 5% for energy-producing plants appears to be a reasonable average estimate.

Technology learning is a key phenomenon that will determine the future cost of renewable power generation technologies. Unfortunately, the present state-of-the-heart does not allow reliable extrapolations. National data indicate learning rates between 4% and 8% for wind turbines in Denmark and Germany. Learning rates for installation costs are one or two percentage point's higher [11-13]. From 1980 to 1995, the cost of electricity from wind energy in the European Union decreased at a considerably higher rate of 18%. Wind energy is a global technology and experience curves based on deployment in major manufacturing countries like Germany and Denmark may be much lower than learning rates elsewhere analyzed the installation cost of wind farms from a global learning perspective and found learning rates between 15% and 19% [14]. Other recent studies quote learning rates of 5% for recent years.

Technology learning rates are better documented for photovoltaics than for other renewable energy sources. PV modules have shown a steady decrease in price over more than three decades, with a learning rate of about 20% [15, 16]. In 1968, the price of one peak watt of PV module was about USD 100,000 per kW. Today the price is about USD 3,000 per kW. Learning for PV modules is a global phenomenon, but prices for balance-of-system components reflect national or regional conditions. The EU-PHOTEX project found learning rates for balance-of-system in Germany, Italy, and the Netherlands to be from 15% to 18%.

Table 5.6 Key cost and investment assumptions for renewables

Learning

Investment

Production

rate

cost 2005

2030

2050

cost 2005

2030

2050

(%)

(USD/kW)

(USD/kW)

(USD/kW)

(USD/MWh)

(USD/MWh)

(USD/MWh)

Biomass

5

1.000-2,500

950-1,900

900-1.800

31-103

30-96

29-94

Geothermal

5

1,700-5,700

1,500-5,000

1,400-4,900

33-97

30-87

29-84

Large hydro

5

1,500-5,500

1,500-5,500

1.500-5.300

34-117

34-115

33-113

Small hydro

5

2,500

2,200

2.000

56

52

49

Solar PV

18

3,750-3,850

1.400-1.500

1.000-1.100

178-542

70-325

<60-290

Solar thermal

5

2.000-2,300

1.700-1,900

1.600-1.800

106-230

87-190

<60-175

Tidal

5

2,900

2.200

2,100

122

94

90

Wind onshore

5

900-1,100

800-900

750-900

42-221

36-208

35-205

Wind offshore

5

1,500-2,500

1.500-1,900

1.400-1.800

66-217

62-184

60-180

Note: Using 10% discount rate. The actual global range is wider as discount rates, investment cost and fuel prices vary. Wind and solar include grid connection cost learning rate implies

Note: Using 10% discount rate. The actual global range is wider as discount rates, investment cost and fuel prices vary. Wind and solar include grid connection cost learning rate implies

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Global warming is a huge problem which will significantly affect every country in the world. Many people all over the world are trying to do whatever they can to help combat the effects of global warming. One of the ways that people can fight global warming is to reduce their dependence on non-renewable energy sources like oil and petroleum based products.

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