Solar and wind are the most fast-growing renewable energy resources in the world as there are numerous of companies and agencies devoting to improve the technologies. International Renewable Energy Agency (IRENA) forecasts that the average cost for electricity generated by solar and wind facilities could decrease by 26% to 59% by 2025.
According to IRENA’s report The Power to Change: Solar and Wind Cost Reduction Potential to 2025, average electricity costs of solar PV generation could be reduced by 59% compared to 2015. Costs of offshore wind could decrease 35%, and 26% for onshore wind projects. Electricity costs for CSP technology could be reduced as much as 43% depending on the technology deployed.
In other words, electricity costs for solar PV and onshore wind could decrease to US$ 5 to 6 cents per kWh by 2025.
IRENA reveals that prices for PV modules and wind turbines have fallen approximately 90% and 30~40%, respectively, from 2009. As long as the installation capacity increases, the prices will further be slashed due to economies of scale and technology improvements. IRENA estimates that every doubling of cumulative installed capacity can drive 20% price drop for solar PV systems and 12% price drop for wind farms.
Furthermore, IRENA calls for adopting right regulatory and policy frameworks in place and technologies because cost reductions will also affected by costs of balance of system (BOS), technology innovations, operation and maintenances, and project managements.
“Given that solar and wind are already the cheapest source of new generation capacity in many markets around the world, this further cost reduction will broaden that trend and strengthen the compelling business case to switch from fossil fuels to renewables,” stated IRENA Director-General Adnan Z. Amin.