Future development of costs for renewable energy systems

Costs for renewable energy systems will decrease further as they have done in the past. Increased production volume, more automation in production and the use of ever more sophisticated technologies will reduce the costs significantly. Production volumes of many renewable energy technologies are still relatively low and many involve multiple production steps, requiring expensive labour.

An important parameter for future cost estimations is the so-called progress ratio PR. This parameter expresses the rate at which costs decline each time the cumulative capacity implementation doubles. For instance, a PR of 90 per cent corresponds to a learning rate of 10 per cent, i.e. there is a 10 per cent cost reduction for each doubling of the cumulative capacity.

The PR of wind power plants for the 1980s and 1990s was between 0.8 and 0.96 depending on the region (Harmsen and van Sambeek, 2003; IEA, 2000). The global installed capacity has doubled approximately every 2.5 years over the past decade. With an average PR of 0.92 the cost reduction is nearly 30 per cent per decade. Further cost reductions can be expected by increasing system sizes. However, in some regions, such as locations in Germany, wind turbines have been already installed at most of the best sites. Using further sites with lower wind speeds can offset part of the cost reduction of increased wind turbine production.

Photovoltaic systems have also achieved noteworthy cost reductions over the past few decades. Figure 6.3 shows the reduction in photovoltaic module prices for three countries. The global progress ratio for photovoltaic systems has been around 0.8 over the past few decades. The installed global photovoltaic capacity has been doubling approximately every three years. The resulting cost reduction is about 50 per cent per decade. Further significant cost reductions are possible due to new solar cell materials and fast-increasing production volumes. Most other renewables also show progress ratios of between 0.8 and 0.9.

This chapter will not give a prediction for future cost developments, because so many unknown parameters will influence them. However, if future progress ratios are in the same range as the progress ratios of the past few decades, renewable energy systems will surely become competitive with all conventional energy types within the 21st century. Besides cost reduction of renewable energy systems, the increase in fuel costs for conventional systems due to limited conventional energy resources will force this development in the long term.

However, exactly when renewable energy systems will dominate the global energy sector depends mainly on the question of when our society will give these energy resources a high priority to counteract the negative consequences of using conventional energy sources.

Renewable Energy 101

Renewable Energy 101

Renewable energy is energy that is generated from sunlight, rain, tides, geothermal heat and wind. These sources are naturally and constantly replenished, which is why they are deemed as renewable. The usage of renewable energy sources is very important when considering the sustainability of the existing energy usage of the world. While there is currently an abundance of non-renewable energy sources, such as nuclear fuels, these energy sources are depleting. In addition to being a non-renewable supply, the non-renewable energy sources release emissions into the air, which has an adverse effect on the environment.

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