Falling Costs Make Wind, Solar More Affordable
IMF Blog, April 26, 2019
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Bibliographic details
- Authors: Christian Bogmans
- Published: April 26, 2019
Key findings
- Solar panels saw a price decline of 76 percent between 2009 and 2017.
- Onshore wind turbines saw a price decline of 34 percent between 2009 and 2017.
- Nuclear costs rose 21 percent between 2009 and 2017.
- Hydropower costs rose 9 percent between 2009 and 2017.
- In 2017, more was invested in solar than in all other low-carbon technologies combined.
- Hydropower attracted the most investment in renewable energy up to 2008.
- Wind turbines took the lead in investment in 2009.
- Solar panels became the dominant investment choice by 2016.
Methods and metrics
- The analysis is based on the levelized cost of electricity, a method of calculating the cost per unit of power needed to recover the investment in building and operating different generating technologies.
Drivers of cost declines for wind and solar
- Research and development in solar and wind technologies.
- Standardization of components and processes.
- Economies of scale in manufacturing.
- Increasing efficiency of solar panels and larger wind turbines.
Reasons nuclear and hydropower costs rose
- Nuclear and hydro are described as mature technologies requiring large investment in structures with low standardization.
- These projects resemble large-scale civil engineering projects (bridges, railroads), which tend to limit potential for cost reduction.
Investment trends and implications
- Global investment in renewable energy capacity accelerated in the past decade as wind and solar emerged as cost-effective power sources.
- The rapid cost declines have made wind and solar competitive alternatives to fossil fuels and to more traditional low-carbon sources such as hydropower and nuclear.
- The experience with wind and solar technologies suggests a possible similar cost-reduction path for electric batteries if production achieves standardization and economies of scale.
Context about the publication
- Author: Christian Bogmans
- Date: April 26, 2019
- Publication: IMFBlog (Chart of the Week, Regional economics)
Source: Falling Costs Make Wind, Solar More Affordable (IMFBlog, April 26, 2019) by Christian Bogmans. The IMF is an organization of 191 countries, based in Washington D.C.
