One of the main arguments used by opponents to RET deployment is that electricity generated by renewable sources will be more costly than electricity from non-renewable energy sources, such as coal, natural gas and nuclear. But how valid is this argument, especially if new generating assets are compared against each other and not against marginal electricity prices? Does it hold for all renewable energy technologies, in all applications and in all regions? Which parameters (investment, risk perception, energy policies) cause the differences?
Isn’t the question rather whether conventional power still represents a viable long-term option for investors and utilities?
Therefore, the issue of “perceived costs” needs to be tackled by providing evidence about the “real costs” of renewable and non-renewable technologies and the real impact of policy measures.
Purpose of the IEA-RETD activities on this topic
IEA-RETD has commissioned a study with the objectives to
- reduce the informational gaps about costs and business cases for different non-RE and RE technologies by investigating primary data.
- Technologies: Nuclear, Coal, Combined cycle Gas Turbines, Onshore wind, Offshore wind and large PV (above 1 MW).
- Countries: Canada, Germany, France, Japan, Norway/Sweden and Spain.
- understand the impact of existing policy measures on the costs of electricity generation;
- document the decision making process of energy utilities and investors when it comes to the choice of investments in power generation capacities, considering cost and revenue streams
- support policy makers in defining policies that are suited for directing investment decisions towards RET.
The study has been awarded to Prysma S.A., a consultancy company from Spain with a global network.
Timeframe: June 2012 – March 2013.
The interim results of the RE-COST 1 project have been presented at the joint IRENA and IEA-RETD workshop Levelised Costs of Renewable Energy: What if costs continue to drop?