Cheap renewables are transforming global electricity business
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Key Findings
While wind’s recent cost decline has not been as universally stellar as solar’s, mostly because wind is a more mature sector, its price downtrend in 2016 and 2017 has been precipitous, particularly in countries with the most favorable conditions and policies.
The scale of offshore wind has moved from below 3MW per turbine at the start of this decade to a planned 12-15MW per turbine proposed for installation by 2024/25, a fivefold increase in 10 years.
A growing number of governments have decided to diverge from the legacy fossil fuel power generation, and this rampant, deflationary trend around renewable will give economic credence to this decision.
Executive Summary
Records were smashed in the energy sector in 2017, with a dramatic drop in solar and wind prices driving a global transformation across the global electricity sector.
Installations of wind and solar totaled almost 155 gigawatts (GW) last year, more than the entire installed power capacity in the U.K., meaning that renewables continue to far outpace coalfired power plant development.
Among the good news for consumers is that the lowest bids for solar dropped a remarkable 50% from records set in 2014 and 2015. The graph below illustrates the ongoing, record breaking down-trend (deflation) of solar power prices.
The following graph provides a within-country, local comparison between the last two lowest solar bids, in 2016 and 107. Country-specific factors in pricing, taxes, inflation-indexation, subsidies and policies prevent a clean inter-country comparison. However, the general trend is common to all, driven by ongoing technology improvements plus gains in economies of scale in all areas of raw materials, manufacturing, procurement and construction, and debt and equity financing.
The transformation under way creates momentum for a rapid shift from fossil fuels by large utilities such as ENGIE in France, NTPC of India and NextEra in the US.
Press release: IEEFA Update: A Tipping Point Is Coming, and Fast
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