The report suggests the average generation cost for onshore wind was around $60/MWh in 2017, and only hydropower was cheaper at around $50/MWh.
Wind’s principal competitor — utility-scale solar PV — came in at around $100/MWh. The figure for offshore wind was $140/MWh, cheaper than concentrating solar power (CSP) at $220/MWh.
The costs of the solar technologies and offshore wind fell drastically between 2010 and 2017, as shown in the chart (below).
Onshore wind fell less sharply, but still registered a 25% drop. The report calculates costs of energy based on a 7.5% interest rate for the OECD and China, and 10% elsewhere.
However, Irena notes that the increasing maturity and reliability of the technologies means that investors are seeing them as less risky, which is likely to reduce generation costs further.
The data is derived from information in the Irena database, which includes information on around 15,000 utility-scale projects.
The report suggests that by 2020 all renewable technologies now in commercial use will fall within the fossil-fuel-fired cost range, with most at the lower end or cheaper than than fossil-fuel sources.
By analysing generation costs and auction results to 2020, the report suggests onshore generation costs could fall to around $50/MWh by that time, with offshore wind costs in the $60-100/MWh range.
As these values may be based on lower interest rates, they may not be strictly comparable with the 2010-16 figures.
The report suggests that the average PV generation cost by 2020, at $60/MWh, may be slightly higher than onshore wind, but notes that there will be lower-cost projects for both technologies delivering electricity, down to $30/MWh. Irena suggests the range for CSP will be similar to that for offshore wind in 2020.
There are, of course, wide regional variations in the costs of all the technologies, with the cheapest costs of energy (fossil and renewable) generally being found in Asia and the most expensive in Africa, except where local availability (or lack of) makes a significant difference.
So geothermal in South America delivers low generation costs, for example, while hydro in Europe is expensive, due to the shortage of suitable sites.
EDF chief hints at UK price cuts
In an interview with the right-wing Sunday Telegraph newspaper in January, the new CEO of EDF Energy, Simone Rossi, speaking at the Hinkley Point C nuclear-power station construction site in the UK, suggested that company might be able to reduce capital costs by 20%, if an order were forthcoming for another power station of identical design.
And it may be possible to reduce the cost of energy by more than this, if innovative financing solutions could also be devised, although no estimates were given.
The price payable for electricity from Hinkley Point is linked to the Consumer Price Index, so the 2012 figure of £92.5/MWh has already risen to around £100/MWh ($139/MWh).
Rossi suggested that the "hidden" cost of wind power due to extra back-up costs, was £15-20/MWh ($21-28/MWh).
This is more than double the estimates from the system operator, and Rossi did not mention the corresponding costs for nuclear.
These arise as the system operator will need to increase the frequency response holding to cope with a sudden fault in one of the reactors, which will become the largest units on the UK system. The cost will be around $3.5/MWh.
Another costly (and late-running) nuclear power station — this time in the US — survived a crucial scrutiny meeting in December when
the Georgia Public Service Commission allowed the project to go ahead, subject to some conditions. The capital costs (in $/kW) of the 2.23GW Vogtle power station were similar to those of Hinkley Point, both exceeding $6,500/kW.
The cost of Vogtle was originally around $14 billion, but this has increased by more than 60% since 2012. At that time, a paper commissioned by the Union of Concerned Scientists suggested the generation cost would be around $115/MWh.
At a glance — This month’s report conclusions
Renewable Power Generation Costs in 2017, International Renewable Energy Agency, January 2018 Comprehensive review of generation costs of the renewable energy sources