The dramatic cost reductions we’ve seen in recent years for solar and wind electricity will continue well into the future, according to a new report released today by IRENA. It finds that by 2025 – with the right regulatory and policy frameworks in place – average electricity costs could decrease 59% for solar photovoltaics (PV), 35% for offshore wind, 26% for onshore wind, and up to 43% for concentrated solar power compared to 2015.
IRENA’s Director-General Adnan Z. Amin commented that “We have already seen dramatic cost decreases in solar and wind in recent years and this report shows that prices will continue to drop. Given that solar and wind are already the cheapest source of new generation capacity in many markets around the world, this further cost reduction will broaden that trend and strengthen the compelling business case to switch from fossil fuels to renewables.”
Since 2009, prices for solar PV modules and wind turbines have fallen 80% and 30-40% respectively. With every doubling of cumulative installed capacity, solar PV module prices drop 20% and the cost of electricity from wind farms drops 12%, due to economies of scale and technology improvements.
Importantly for policy makers, cost reductions to 2025 will depend increasingly on balance of system costs (e.g. inverters, racking and mounting systems, civil works, etc.), technology innovations, operations and maintenance costs and quality project management. The focus in many countries must therefore shift to adopting policies that can reduce costs in these areas.
“Historically, cost has been cited as one of the primary barriers to switching from fossil-based energy sources to renewable energy sources, but the narrative has now changed. To continue driving the energy transition, we must now shift policy focus to support areas that will result in even greater cost declines and thus maximise the tremendous economic opportunity at hand.” – IRENA Director-General Adnan Z. Amin
The Power to Change: Solar and Wind Cost Reduction Potential to 2025, is the first of several solar-focused publications IRENA will release this summer. Future reports include Letting in the Light: How Solar Photovoltaics Will Revolutionize the Electricity System – which provides a comprehensive overview of solar PV across the globe and its prospects for the future – and a report on end-of-life management for solar PV panels. Both reports will launch at InterSolar Europe, taking place in Munich, 21-24 June.