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wind power costing 27 nov 2012 at the Energy Talk, London
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wind power costing 27 nov 2012 at the Energy Talk, London



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  • -It had the first Assembly as an inaugural meeting in April, this is when IRENA became fully active.-We are neutral/unbiased among all RET.
  • - Refer to the information note on accession process


  • 1. The Renewable Revolution:Wind Power Costs Michael Taylor mtaylor@irena.org IRENA Innovation and Technology Centre 27 November, 2012
  • 2. About IRENA Director-General: Adnan Amin Established April 2011 The intergovernmental RE agencyMission: Accelerate deployment of renewable energyScope: Hub, voice and source of objective information for renewable energyMandate: Sustainable deployment of the six RE resources (Biomass, Geothermal, Hydro, Ocean, Solar, Wind)Location: Headquarters in Abu Dhabi, United Arab Emirates Innovation and Technology Centre IITC, Bonn 2
  • 3. IRENA Membership IRENA’s 101 Members and 159 Signatories Status: September, 2012 3
  • 4. Organizational structure Office of the Director -General Knowledge Policy Advisory Innovation and ManagementServices, Capacity Technology Centre Innovation andBuilding (PASCB) (IITC) Technology (KMTC) IRENA is NOT a: Bank R&D institute 4 NGO
  • 6. Rationale and goals• Renewable energy can meet countries policy goals for secure, reliable and affordable energy and access.• Lack of objective and up-to-date data• Economics are a key decision factor• Cost declines, rapid for some renewables, occurring• Decision making is often based on:  outdated numbers  opinion, not fact based• IRENA to strive to become THE source for cost data• Goals are to assist government decision-making, and fill significant information gap 6
  • 7. Framework Where to set the boundaries? Are costs even available? Prices, or price indicators? 7 Levelised cost of electricity (LCOE)
  • 8. Data Sources• General information  Business journals (eg Photon), consultancies (eg BNEF), industry associations (eg WWEA, ESTELA, etc.), auctions and tenders (eg Brazil), project design studies, development banks (e.g. KfW), World Bank, etc......• Questionnaire: real world project data IRENA/GIZ collaboration  79 projects for Asia and Africa (34 PV, 20 hydropower, 11 wind, 8 biomass, 3 hydbrid and 3 CSP)  7 submissions unusable!• Data gaps, some assumptions required. Transportation data difficult to seperate out• Difficult to define what is a “development project“• Inconsistencies in the allocation of costs 8
  • 9. TODAY’S COSTS 9
  • 10. Key findings• A renewable revolution is under way• Dramatic cost reductions for Solar PV, onshore wind competitive at best sites, CSP has great potential, hydropower and biomass more mature• Unpredictable price variations affect policy efficiency• Renewables now the economic solution off-grid and for mini-grids• Data collection poses challenges• A shift in policy focus will need to come 10
  • 11. Levelised cost of electricity 11 Note: assumes a 10% cost of capital
  • 12. Wind• Capacity factors are increasing (US example)• Wind turbine prices declining (US example)• The LCOE is coming down (Brazilian Auctions)• Onshore wind is now competitive with fossil fuels in many countries• Offshore wind is still expensive 12
  • 13. Wind turbine prices 13 Sources: LBNL, 2012; BNEF, 2012; IEA Wind, 2007, 2008, 2009, 2010, 2011 and 2012.
  • 14. Wind farm total installed costsNon-OECD 14 Sources: IRENA Renewable Cost Database
  • 15. Wind farm capacity factorsNon-OECD 15 Sources: LBNL, 2012 and IRENA Renewable Cost Database
  • 16. O&M costs 16
  • 17. The LCOE of windNon-OECD 2011 USD/kWh 17
  • 19. Learning curve for turbinesStrong anomalies in recent years; further analysis needed H2 2012 Chinese turbine prices 19 Source: Bloomberg New Energy Finance, February, 2011
  • 20. The share of O&M in the LCOEof wind power 20
  • 21. Summary of costreduction potentials• Wind is often the most competitive non-hydro RE, LCOE will continue to decline.• Will global market prices for turbines converge like PV modules?• Operation and maintenance cost can account for a substantial share of LCOE, cost reduction potential less well understood.• Balance of project costs: will these continue to decline as rapidly as equipment costs?• Reasons for differences in bottom-up engineering cost estimates and real world project costs not well understood 21
  • 22. CONCLUSIONS 22
  • 23. Implications of cost declines• Rapid, unexpected, cost reductions pose challenges• Efficient support policies still needed• An integrated strategy is required• Policy focus will need to shift, depending on country, in the near future. Few countries “get” this! 23
  • 24. To Conclude• A renewable revolution underway driven by a virtuous circle• Renewables are THE economic solution for off-grid and mini-grid electricity projects (PV and small-scale wind, biomass and hydro) and increasingly for grid-supply• Wind, and renewables in general, increasingly competitive without assistance. But typically for best resources -> needs to expand• Reductions in LCOE of wind will be driven by technology improvements and capital cost reductions, but are there constraints?• Renewables will increasingly have to work together• Analysis will have to shift from LCOE to electricity system costs. Demand- side is the forgotten resource!• The quest for better cost data and understanding of differences continues. 24 Regular updates for PV, CSP and wind will be needed
  • 25. Renewables are increasingly competitive, but more needs to be done to fulfill their potential…IRENA is part of the solution 25
  • 26. Additional slides 26
  • 27. Typical installed capital costsand capacity factors 27