Germany

Germany

WindEconomics: Renewables lead the way in Germany

GERMANY: An authoritative report from the German Fraunhofer Institute confirms that wind and solar are now cheaper than all other electricity-generating technologies. In Germany, the most productive solar plants are slightly cheaper than the most productive wind farms.

Data is reported for small and large rooftop PV systems, utility PV, onshore and offshore wind, biogas, brown coal, hard coal and combined-cycle gas turbines.

The levelised cost of energy for each technology was derived using weighted average costs of capital (WACC) that were lower than those used in some other studies.

The real WACC for utility-scale PV is 2.1%, whereas onshore wind needs a slightly higher figure of 2.5%.

The less mature status of offshore wind leads to a WACC of 4.8%, which is still below fossil-fuel sources, which fall between 5.2% and 5.6%.

Overall, this means that the levelised costs of energy given for PV and wind may be lower than figures quoted elsewhere.

Fraunhofer puts utility PV at €37-68/MWh, onshore wind at €40-82/MWh, offshore wind at €75-138/MWh and the fossil technologies at €46-100/MWh.

The capital costs used for the analysis are shown in the top chart. Utility-scale PV is estimated to cost €600-800/kW, with small rooftop systems costing about twice as much.

Onshore wind comes in at €1,500-2,000/kW and offshore wind at €3,100-4,700/kW.

The cheapest fossil-fuel technology is the combined-cycle gas turbine, costing €800-1,000/kW. These figures are similar to estimates from the US Department of Energy.

Although the capital cost of PV systems is roughly half that of onshore wind, their output — in terms of kilowatt hours per kilowatt installed — is also roughly half.

That is why the costs of energy from PV systems are similar to those of wind. Capacity factors of PV systems in Germany range from 11% in the north to 15% in the south.

With onshore wind, the situation is reversed, with coastal regions delivering capacity factors up to around 36%, compared with around 20% in southern Germany.

The generating cost estimates for gas and coal include a small addition for carbon costs, in line with current EU levels (€5/tonne of CO2).

These are expected to increase in the future, while gas and hard coal prices are expected to rise as well. Biogas fuel prices are assumed to stay the same.

Wind and PV costs are expected to continue on their downward path, with PV falling at a greater rate than wind. Overall, the competitive position of PV and wind will strengthen.

The role of biomass

Electricity produced from biomass is often seen as an important contributor to electricity systems powered with a high percentage of renewables, especially in regions where other steady sources (such as geothermal and hydro) are not available.

Fraunhofer uses the term "biogas", while other authorities refer to "biomass".  

Electricity production from biofuels is steady and plants potentially have a high load factor. The German energy ministry regards biofulels as an important energy source.

However, biomass plants have significantly higher capital costs than coal and gas, and their thermal efficiency is lower.

At around €30/MWh, the fuel costs are around 50% higher than the cost of gas in Germany, which, in turn, is higher than the cost of gas in the US.

The Fraunhofer report uses a range of load factors from 57% to 80% and derives electricity generating costs in the €101-147/MWh range.

Electricity production from around 7GW of biomass plants in Germany accounted for 7% of the total in 2017, more than PV (6%), but less than wind (16%).

This includes a range of technologies, mainly energy crops, grown specifically for electricity production and used directly, or put through a fermentation process to produce methane. Organic waste can also be used to produce methane.

Other methods of producing biogas are being investigated worldwide.

At a glance — This month’s report conclusions

Levelised cost of electricity renewable energy technologies, Fraunhofer Institute for Solar Energy Systems ISE, March 2018 Comprehensive review of PV, wind and biogas costs, with sensitivity analyses and projections up to 2035.

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