wind power costing 27 nov 2012 at the energy talk, london
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The Renewable Revolution:Wind Power Costs
27 November, 2012
Michael [email protected]
IRENA Innovation and Technology Centre
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Director-General: Adnan Amin
Established April 2011
The intergovernmental RE agency
Mission: Accelerate deployment of renewable energy
Scope: Hub, voice and source of objective information for
renewable energy
Mandate: Sustainable deployment of the six RE resources
(Biomass, Geothermal, Hydro, Ocean, Solar, Wind)
Location: Headquarters in Abu Dhabi, United Arab Emirates
Innovation and Technology Centre IITC, Bonn
About IRENA
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IRENA Membership
Status: September, 2012
IRENA’s 101 Members and 159 Signatories
Organizational structure
Office of the Director -General
Policy Advisory Services, Capacity Building (PASCB)
Knowledge Management
Innovation and Technology (KMTC)
Innovation and Technology Centre
(IITC)
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IRENA is NOT a:Bank
R&D instituteNGO
COSTING….
WHY?HOW?WITH WHOM?
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Rationale and goals
• Renewable energy can meet countries policy goals for
secure, reliable and affordable energy and access.
• Lack of objective and up-to-date data
• Economics are a key decision factor
• Cost declines, rapid for some renewables, occurring
• Decision making is often based on:
outdated numbers
opinion, not fact based
• IRENA to strive to become THE source for cost data
• Goals are to assist government decision-making, and fill
significant information gap 6
Framework
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Where to set the boundaries?
Are costs even available? Prices, or price indicators?
Levelised cost of electricity (LCOE)
Data Sources
• General information Business journals (eg Photon), consultancies (eg BNEF), industry associations
(eg WWEA, ESTELA, etc.), auctions and tenders (eg Brazil), project design
studies, development banks (e.g. KfW), World Bank, etc......
• Questionnaire: real world project data IRENA/GIZ collaboration
79 projects for Asia and Africa (34 PV, 20 hydropower, 11 wind, 8
biomass, 3 hydbrid and 3 CSP)
7 submissions unusable!
• Data gaps, some assumptions required. Transportation data difficult
to seperate out
• Difficult to define what is a “development project“
• Inconsistencies in the allocation of costs8
TODAY’S COSTS
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Key findings
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• A renewable revolution is under way
• Dramatic cost reductions for Solar PV, onshore wind
competitive at best sites, CSP has great potential,
hydropower and biomass more mature
• Unpredictable price variations affect policy efficiency
• Renewables now the economic solution off-grid and for
mini-grids
• Data collection poses challenges
• A shift in policy focus will need to come
Levelised cost of electricity
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Note: assumes a 10% cost of capital
Wind
• Capacity factors are increasing
(US example)
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• Wind turbine prices declining
(US example)
• The LCOE is coming down
(Brazilian Auctions)
• Onshore wind is now competitive
with fossil fuels in many countries
• Offshore wind is still expensive
Wind turbine prices
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Sources: LBNL, 2012; BNEF, 2012; IEA Wind, 2007, 2008, 2009, 2010, 2011 and 2012.
Wind farm total installed costsNon-OECD
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Sources: IRENA Renewable Cost Database
Wind farm capacity factorsNon-OECD
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Sources: LBNL, 2012 and IRENA Renewable Cost Database
O&M costs
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The LCOE of windNon-OECD
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2011
US
D/k
Wh
COST REDUCTION POTENTIAL
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Learning curve for turbinesStrong anomalies in recent years; further
analysis needed
19Source: Bloomberg New Energy Finance, February, 2011
H2 2012
Chinese turbine prices
The share of O&M in the LCOEof wind power
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Summary of cost reduction potentials
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• Wind is often the most competitive non-hydro RE, LCOE will
continue to decline.
• Will global market prices for turbines converge like PV
modules?
• Operation and maintenance cost can account for a
substantial share of LCOE, cost reduction potential less well
understood.
• Balance of project costs: will these continue to decline as
rapidly as equipment costs?
• Reasons for differences in bottom-up engineering cost
estimates and real world project costs not well understood
CONCLUSIONS
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Implications of cost declines
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• Rapid, unexpected, cost reductions pose challenges
• Efficient support policies still needed
• An integrated strategy is required
• Policy focus will need to shift, depending on country, in the
near future. Few countries “get” this!
To Conclude
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• A renewable revolution underway driven by a virtuous circle
• Renewables are THE economic solution for off-grid and mini-grid
electricity projects (PV and small-scale wind, biomass and hydro) and
increasingly for grid-supply
• Wind, and renewables in general, increasingly competitive without
assistance. But typically for best resources -> needs to expand
• Reductions in LCOE of wind will be driven by technology improvements
and capital cost reductions, but are there constraints?
• Renewables will increasingly have to work together
• Analysis will have to shift from LCOE to electricity system costs. Demand-
side is the forgotten resource!
• The quest for better cost data and understanding of differences continues.
Regular updates for PV, CSP and wind will be needed
Renewables are increasingly competitive, but more needs to be done to fulfill their potential…
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www.irena.org/publications
IRENA is part of the solution
Additional slides
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Typical installed capital costsand capacity factors
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