The average cost of electricity generated by solar and wind technologies could drop by between 26% and 59% by 2025, according to a new report from the International Renewable Energy Agency.
According to a new report from the International Renewable Energy Agency (IRENA), The Power to Change: Solar and Wind Cost Reduction Potential to 2025, with the right regulatory and policy frameworks governing the development of wind and solar technologies, future cost reductions could increase by 26% to 59% by 2025, and beyond. Specifically, the report predicts that the average electricity costs could decrease by 59% for solar PV, concentrated solar by 43%, (depending on which technology is used), 35% for offshore wind, and 26% for onshore wind compared to levels found in 2015.
In the end, the report concludes that the global average cost of electricity from solar PV and onshore wind will be approximately 5 to 6 US cents per kilowatt hour.
“We have already seen dramatic cost decreases in solar and wind in recent years and this report shows that prices will continue to drop, thanks to different technology and market drivers,” said Adnan Z. Amin, IRENA Director-General. “Given that solar and wind are already the cheapest source of new generation capacity in many markets around the world, this further cost reduction will broaden that trend and strengthen the compelling business case to switch from fossil fuels to renewables.”
The authors of the report believe that any cost reductions we see in these technologies “will be driven by increasing economies of scale, more competitive supply chains and technology improvements that will raise capacity factors and/or reduce installed costs.” We have already seen this happen with the growth of the onshore wind industry, and are seeing it in action throughout the solar PV sector. Favorable policy has also spurred innovation and development for onshore wind and solar, with governments now looking to support next technologies — offshore wind, concentrated solar, and biomass.
The full report is available for download here for further information, and detailed analysis of individual technologies’ potential cost reductions.
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