IEA: LCoE Renewables at par with Fossil

Projected Costs of Generating Electricity – 2015 Edition is the eighth report in the series on the levelised costs of generating electricity by the International Energy Agency. This report presents the results of work performed in 2014 and early 2015 to calculate the cost of generating electricity for both baseload electricity generated from fossil fuel thermal and nuclear power stations, and a range of renewable generation, including variable sources such as wind and solar.

It is a forward-looking study, based on the expected cost of commissioning these plants in 2020. The LCOE calculations are based on a levelised average lifetime cost approach, using the discounted cash flow (DCF) method. The calculations use a combination of generic, country-specific and technology-specific assumptions for the various technical and economic parameters, as agreed by the Expert Group on Projected Costs of Generating Electricity (EGC Expert Group). For the first time, the analysis was performed using three discount rates (3%, 7% and 10%).

Lceo fossil

Lceo renewables

This eighth edition of Projected Costs of Generating Electricity focuses on the cost of generation for a limited set of countries, and even within these countries only for a subset of technologies. Some conclusions can be drawn.

First, the vast majority of the technologies included in this study are low- or zero-carbon sources, suggesting a clear shift in the interest of participating countries away from fossil-based technologies, at least as compared to the 2010 study.

Second, while the 2010 study noted a significant increase in the cost of baseload technologies, the data in this report suggest that any such cost inflation has been arrested. This is particularly notable in the case of nuclear technologies, which have costs that are roughly on a par with those reported in the prior study, thus undermining the growing narrative that nuclear costs continue to increase globally.

Finally, this report clearly demonstrates that the cost of renewable technologies – in particular solar photovoltaic – have declined significantly over the past five years, and that these technologies are no longer cost outliers.