International Renewable Energy Agency

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International Renewable Energy Agency ( international-renewable-energy-agency )

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The database currently contains data for around 8 000 projects from a variety of sources, although many of these are project proposals.1 Every project incorporated in the database has basic data on the project location, type, capital costs and capacity factors, although only a smaller sub‐set of the database contains more comprehensive data on the breakdown of capital costs, more complete performance data, operations and maintenance costs and financing details. IRENA is working to complete this picture, by extracting data for a single project from multiple sources for important projects. Every effort has been made to ensure that the data are directly comparable and have the same system boundaries. Where this is not the case, the data have been corrected to a common basis using the best available data. 1 This excludes data on over 100 000 operating solar PV projects in the United States, predominantly in California, that IRENA also has access to. IRENA is also working on analysis that will reconcile the actual, ex-post costs of projects with their original project proposals (typically provided to access finance) in order to identify trends and draw out lessons for policy makers and project developers. It is important to note that although the goal is to collect data on costs, strictly speaking the data available are actually prices. The difference between costs and prices is determined by the amount above, or below, the normal profit that would be seen in a competitive market.2 The rapid growth of renewables from a small base means that the market for renewable power generation technologies, like many other markets, is rarely well balanced. As a result, prices can rise significantly above costs in the short term if supply is not expanding as fast as demand. Conversely, in times of excess supply, losses can occur and prices may fall below the full amortised production costs to the cash cost of manufacture. While this makes analysing the cost of renewable power generation technologies challenging, it also means that the analysis has significant value. Identifying whether current equipment costs are above or below their long‐ term trend, and when supply and demand balances may change, can be critical to project development costs, commitment and financing decisions. 2 A normal level of profit occurs when the selling price of electricity yields a return over the life of the project equal to the cost of capital of the project. Prices above this yield “super normal” profits and prices below this lower than normal profits and potentially even losses. The two main CSP systems are parabolic trough and solar towers. The majority of commercial experience has so far been with parabolic trough systems, which have LCOEs of between USD 0.20 to USD 0.36/kWh. The LCOEs of solar towers are similar, although a little lower, at between USD 0.17 to USD 0.29/kWh for solar towers. However, the LCOE of CSP in areas with excellent solar resources could be even lower and may be in the range of USD 0.14 to USD 0.18/kWh. Looking to the future, solar towers appear to have a greater potential for cost reductions, with higher operating temperatures also helping to improve efficiency and allow lower costs for thermal energy storage. These factors will help drive the LCOE lower and make solar towers very attractive solutions for providing flexible electricity generation and helping facilitate the penetration of wind and solar PV. Biomass‐generated electricity can be very competitive where low‐cost feedstocks are available onsite at industrial, forestry or agricultural processing plants. In such cases projects can produce electricity for as little as USD 0.06/kWh in the OECD, and as low as USD 0.02/kWh in developing countries. The typical LCOE range for biomass‐fired power generation projects is between USD 0.06/kWh and USD 0.15/kWh, but where expensive feedstocks, such as woodchips or pellets, are required in gasifiers where technology experience is lower, the LCOE would be higher. Geothermal electricity generation is a mature, baseload generation technology that can provide very competitive electricity where high‐quality resources are well defined. The LCOE of conventional geothermal varies from USD 0.09 to USD 0.14/kWh for typical projects, assuming a 10% cost of capital. However, the LCOE can be as low as USD 0.05/kWh at the most competitive projects – such as those which utilise excellent well‐documented or adjacent resources, or are adding capacity to an existing geothermal project – as past experience can reduce development risks and some existing infrastructure may already be in place. Renewable Power Generation Costs in 2012: An Overview 17

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