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According to the latest report published by the IRENA agency, investment costs for the construction of electricity generating facilities around the world are decreasing for all types of renewable energy sources, but this is especially noticeable for solar energy and wind power plants. In fig. 1 shows a comparison of electricity prices for small and medium-sized installations in the utility sector from 2010 to 2017. Figures for 1 kWh are based on the US dollar exchange rate in 2016 (comparison base). A rather large scatter of individual indicators (almost 4 times for PV and more than 2 times for CSP stations) is explained by the wide geography of the localization of solar installations, climate, local regulatory rules and lending rates that affect the total cost of 1 kW of installed capacity, taking into account all costs (BoS). The averaged data show that PV generation over 8 years has fallen in price by 3, 6 times for PV plants in the entire power range. The decrease in PV energy costs since 2010 has been staggering and exceeded all expectations - the total present value of electricity (LCOE) for new PV projects commissioned in 2017 decreased by 73% compared to 2010 - to $ 0.10 per 1 kWh.

New renewable energy projects have already come close or are already in the price range of hydrocarbon solar energy generation. (The range of costs for generating energy from fossil fuels for the G20 countries in 2017 was estimated in the range from $ 0.05 to $ 0.17 per 1 kWh.)

Renewable energy will soon be universally cheaper than most fossil fuels. It is expected  that by 2020 all commercial renewable solar energy technologies will be in the range of the cost of electricity from combusted hydrocarbons, with most renewable energy technologies being at or even lower than fossil fuel generation prices.

The diameter of the circle shows the capacity of the project, its center - the value of the cost for this project (Y-axis). The lines show the LCOE level for units commissioned in the corresponding year. Strip - the range of costs for generating energy from fossil fuels. The LCOE value for each technology is the ratio of the lifetime cost to electricity generation over the lifetime, adjusted for a discount rate that reflects the average cost of capital. In this IRENA report, all LCOE results are calculated assuming a real cost of capital of 7.5% in the Organization for Economic Cooperation and Development (OECD) countries and China and 10% in the rest of the world.

One often hears criticism that the price cuts are almost non-existent in the small PV home power sector (located mainly on rooftops). IRENA's research refutes such claims It is clear that for large plants the average aggregate indicators for the generation cost will be better than for small ones. However, the cost of residential PV modules has dropped by about 4/5, making custom PV systems for housing now 2/3 cheaper than in 2010, and the cost of PV projects for the utility sector has decreased by 68%.

With the proliferation of solar technology, LCOE-based cost analysis is becoming more accurate. The IRENA RES database now includes indicators for> 750,000 small home and ~ 15,000 utility PV systems in OECD countries.

Three key factors in reducing average global costs:

1. Improving technology

Following the decline in prices for PV modules in the period 2010-2017, the average LCOE of solar stations decreased by 69% (see Fig. 1) and will continue to decline until 2022 (the horizon of this forecast), becoming competitive with the price of solar energy from fossil fuel

Due to an 81% decline in solar PV module prices since the end of 2009, as well as a decrease in the book value of the entire system (BoS), the global weighted average LCOE for PV plants for the period 2010-2017 decreased by 73% to $ 0. 10 / kW • h. Concentrated Solar Power (CSP) technology has also reduced costs, although it is still in its infancy in terms of breadth of implementation. The global LCOE for CSP is now $ 0.22 per kWh. However, the auctions in 2016 and 2017. for CSP projects with commissioning in 2020 and later show a further gradual decline - costs for CSP will also come out to $ 0.10 per kWh.

New solar PV cells are more efficient. Real-time data collection and big data technology have improved predictive services for generation and reduced operating and maintenance (O&M) costs. The advent of modular designs and the mass production of all PV system components have significantly reduced these cost items in BoS. Modular, scalable solar technology and replication in project development also result in continuous cost savings.

Technological improvements remain at the core of the potential for reducing renewable solar energy costs. At the same time, the achieved technology maturity and proven experience in the use of renewable energy sources now reduce project risks, which reduces the cost of borrowed capital for the implementation of renewable energy projects. Reducing prices opens up new opportunities for the use of RES

2. Competitive (auction) purchases

Competitive procurement, including open auctions, has so far had little impact on the global distribution of renewable energy sources. However, these mechanisms reduce costs very quickly in new markets. shows data on actual LCOE and auction prices from 2010 to 2022.

The results of the latest RES auctions for projects commissioned in the coming years confirm that cost reductions will continue until 2020 and beyond. Currently, the IRENA Database with the results of auctions and other competitive procurement processes contains about 7000 projects.

Auctions provide important price signals about future trends in electricity costs: LCOE of individual projects could drop to $ 0.03 per kWh as early as 2018, while global average costs for PV generation could drop to $ 0.06 per kWh ... The results of the auctions show that by 2020 the CSP technology will provide electricity at prices ranging from $ 0.10 to $ 0.06 per kWh.

The logarithmic scale in facilitates the interpretation of descent curves by showing solar energy them as straight lines. A decrease in prices for the period from 2010 to 2020 for CSP will be at the level of 30% (the expansion of use will be ~ 89% of the total installed capacity by the end of this period), and for PV technologies, the decrease will be ~ 35% (with an increase in the commissioning of new capacities by 94% by the end of the forecast interval). It is expected that by 2020 the total installed capacity of CSP will be 12 GW, PV stations 650 GW.

3. Internationalization of projects

Global competition promotes the universal application of the world's best project development practices, leads to a decrease in technological costs, project risks and an increase in the efficiency of the use of renewable energy sources, to a reduction in construction and installation costs, to a reduction in O&M costs, etc., to a greater extent than when -or before. Serial and mass production of components for renewable solar energy plants have significantly reduced production costs.

International corporations have joined the RES business, thanks to which, in a number of developing countries, RES has become cheaper than hydrocarbon generation. In developed countries, solar energy has become cheaper than from new nuclear power plants.



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