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Published September 15, 2020
Electricity generated from wind and solar may be up to 50% cheaper than previously thought, according to a new report on electricity generation costs published by the Department for Business, Energy and Industrial Strategy.
The new BEIS figures show the cost of renewable power has come down significantly since 2016. The figures estimate electricity generated from wind and solar is 30-50% cheaper than four years ago.
A previous report in 2016 had reduced the cost of wind and solar by up to 30%. The new estimates suggest electricity from onshore wind or solar could be supplied in 2025 at half the cost of gas-fired power.
The report sets out estimates of the ‘levelised cost of electricity’ (LCOE) for various forms of power generation, from wind, solar and gas CCS to unabated gas-fired power stations. A ‘levelised cost’ is the average cost of the lifetime of the plant per MWh of electricity generated. This reflects the cost of building, operating and decommissioning a generic plant for each technology.
“The fact is there have been dramatic reductions in offshore wind costs in recent years, at least in the price developers are prepared to bid for work, so it’s not surprising that this has now been taken into account,” said Jeremy Nicholson, Alfa Energy’s Corporate Affairs Officer. “Enhanced levelised costs includes systems costs for intermittent sources such as wind and solar. To compare them on an equitable basis with on-demand forms of generation sources such as gas or hydro is not straightforward, so it is to BEIS’ credit for attempting it.
The BEIS report also presents new estimates of the ‘enhanced levelised cost’ of different technologies, which reflects any wider system benefits and their system integration costs. Using the new methodology, a gas-fired power station with carbon capture and storage compares favourably with the costs of a wind or solar plant.
Tags BEIS wind power