Renewable Energy Price per kWh

Subject: Renewable energy Price per Kwh

Description: Price evaluation of energy produced by renewable sources.

 

In general the final price of electricity per Kwh depends on the following elements:

  • An energy conversion unit, named “power plant” or a production unit, in case the source of production is renewable.
  • An incoming energy: coal, gas, oil, something fissile like nuclear, a waterfall, wind, sun rays, ground heat such as geothermal, or any other energy available in the environment,
  • A system to manage unwanted byproducts like ashes, fumes, radioactive waste.
  • An electrical grid to evacuate and distribute the electricity generated to the final consumers.
  • Additionally there is the added cost of administrative work and the imposed taxes, which is different, according  to local and international policies.

 

With the rapid growth of energy production from renewable sources, comparing costs of different forms of power generation has become important for policymakers, investors and analysts across different sectors involved. Therefore, cost is one of the key factors influencing the choice of fuels and technologies used to generate electricity. Moreover, the capital, maintenance, operating, and financing costs often vary drastically across technologies and fuels. In addition, regional differences in terms of  construction, fuel, transmission, and resource costs mean that location also matters regarding the final price of electricity.

 

Consequently, in most parts of the world today, electricity generation from renewables sources have become the lowest-cost source of new power generation. As costs of electricity production continue to fall for solar and wind technologies, it will be the case for  a growing number of countries. Indeed, electricity produced from the renewable sources like wind, solar, hydroelectricity, biomass and geothermal are globally becoming cheaper each year, thanks to the technology improvement, investments and capacity building in these sectors.

A study done by French Environment and Energy Management Agency, (ADEME) in 2016, elaborates  a cost comparison of electricity produced from different renewable sources and their price in euros per MWh, called the Levelized cost of energy (LCOE),  a common metric term used for cost comparisons across projects and technologies. Th is metric term  considers a plant’s expected lifetime and operation cycle and amortizes those costs over an assumed financial lifetime. Since LCOEs do not include contractual terms on price, duration, or price inflators. the price per Kwh of energy produced from renewable sources is expected to continuously decrease in the upcoming years ahead, as shown in the graph below, published by ADEME.

 

 

 

 

 

Source: ADEME

 

Furthermore, based on a report from the International Energy Renewable Energy Agency, the expectations about future cost reductions for solar PV and onshore wind are once again being continually beaten by lower values as new data becomes available. At the beginning of 2018, IRENA’s analysis of auction and Power purchase agreement (PPA) data suggested that the global weighted-average cost of electricity could fall to USD 0.049/kWh for onshore wind and USD 0.055/ kWh for solar PV in 2020. A year later, the potential value for onshore wind in 2020 has dropped a further 8%, to USD 0.045/kWh, while that of solar PV drops 13%, to USD 0.048/kWh.

 

Hence, the roadmap for the price per Kwh electricity produced from the renewable’s sources are decreasing each year, which convince and create a platform for more investments and technology improvement in the mention domains. Besides, electricity generation from the renewable sources are offsetting and acts as an alternative solution to mitigate and reduce the climate change effect of the fossil fuel industry. Subsequently, It helps countries across the world to meet their green target polices and sustainable development goals (SDGs).

 

Sources:

  1. https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2019/May/IRENA_Renewable-Power-Generations-Costs-in-2018.pdf
  2. https://www.forbes.com/sites/dominicdudley/2019/05/29/renewable-energy-costs-tumble/#7ee13b95e8ce
  3. https://www.ademe.fr/sites/default/files/assets/documents/renewable-electricity-mix-final-report-ademe-201601.pdf

A propos de Ali AHMAD FAIZY

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