In August, the International Energy Agency released the 2015 edition of its authoritative Projected Costs of Generating Electricity.
The report quotes median values of the generating costs of the principal technologies (coal, gas, nuclear, onshore wind, offshore wind and large ground-mounted photovoltaic arrays) at three different interest rates of 3%, 5% and 10%.
Onshore wind fares well. The levelised cost of energy, the lifetime cost of building and operating a generating plant, with a 3% interest rate, is about $75/MWh — less than the equivalent figures for coal and gas and PV, but more than nuclear. At a 10% interest rate the price is around $110/MWh, slightly higher than for gas and coal, but cheaper than nuclear.
The last report, in 2010, did not quote a global median, but the corresponding value for Europe was $150/MWh, for Asia $115/MWh and for the US just over $90/MWh. Allowing for inflation (typically about 10%) therefore, the drop in generation costs over the past five years has been substantial.
"New nuclear power plants generate electricity more cheaply than other established baseload sources such as coaland gas-fired power plants over the full lifetime of facilities when financing costs are relatively low," the IEA report says.
However, it also notes that no single technology proves the cheapest form of electricity generation under all circumstances. "Many factors determine the final cost of any investment, principally local influences such as market structure, policy environment and resource endowments."
The analysis of the report looks at generation costs from more than 180 plants - large nuclear and fossil-fuel facilities, wind farms and three types of solar PV (residential, commercial and ground-mounted) — in 22 countries, including Brazil, China and South Africa.
Unsurprisingly, China delivers the cheapest generation costs in many instances, but not for gas-fired generation, where the US delivers the lowest costs, at around $71/MWh when using a 10% interest rate.
In the table showing the least and most expensive country for each technology, above, Japan figures most frequently as the most expensive. China provides the cheapest prices for coal, nuclear and PV, but the US delivers the lowest wind prices. Only at the lowest interest rate, offshore, is it beaten by Denmark. The full range through minimum, median and maximum prices, for interest rates of 3% and 10% is shown in the chart, below.
A more accurate picture of price comparisons between technologies can be derived by assigning interest rates appropriate to the risks of the technology. Onshore wind is now well established, and so an interest rate of 7% would be more appropriate in most instances. The median figure for wind is then around $95/MWh, significantly below the median figure for nuclear with a 10% interest rate — about $115/MWh.
The report also includes data for other renewable technologies, whose geographical spread is limited. Large hydro, however, is used or planned in a number of locations, with a minimum price ranging from $22/MWh at a 7% interest rate in China to $252/MWh in Switzerland. Geothermal is cheap where hot water or steam is close to the ground; Italy quotes $81/MWh and New Zealand $46/MWh.
AT A GLANCE — THIS MONTH'S REPORT CONCLUSIONS
Projected costs of generating electricity, 2015 edition, by International Energy Agency, Nuclear Energy Agency, Organisation For Economic Co-Operation and Development, August 2015 Generating costs for onshore wind is competitive with large-scale source in many instances, at $75/MWh at 3% interest rate, and $110/MWh with 10% interest rate.