Renewable technologies’ levelised cost of energy (LCOE) continues its downward trajectory, with battery storage and offshore wind showing stand-out improvements in competitiveness against conventional options, according to latest figures from Bloomberg New Energy Finance (BNEF).
The benchmark LCOE for lithium-ion batteries has dropped 35% to $187/MWh since the first half of 2018, while offshore wind’s fell by 24% to under $100/MWh.
Onshore wind and PV also continue to lower their LCOEs, tumbling by 10% and 18%, respectively, to $50/MWh and $57/MWh compared to a year ago.
“Looking back over this decade, there have been staggering improvements in the cost-competitiveness of these low-carbon options, thanks to technology innovation, economies of scale, stiff price competition and manufacturing experience,” said Elena Giannakopoulou, head of energy economics at BNEF.
“Our analysis shows that the LCOE per MWh for onshore wind, PV and offshore wind have fallen by 49%, 84% and 56% respectively since 2010. For lithium-ion battery storage [it] has dropped by 76% since 2012, based on recent project costs and historical battery pack prices.”
She noted the “most striking finding” in the report is the cost improvements in lithium-ion batteries, which are “opening up new opportunities for them to balance a renewables-heavy generation mix”.
Batteries co-located with PV or wind projects are “starting to compete in many markets and without subsidy” with coal- and gas-fired generation for ‘dispatchable power’ that can be delivered on-demand, said Giannakopoulou.
PV and onshore wind have won the race to be the cheapest sources of new ‘bulk generation’ in most countries.
Tifenn Brandily, energy economics analyst at BNEF, added: “PV and onshore wind have won the race to be the cheapest sources of new ‘bulk generation’ in most countries, but the encroachment of clean technologies is now going well beyond that, threatening the balancing role that gas-fired plant operators, in particular, have been hoping to play.”
Offshore wind has been helped by the scale-up of turbine technology and auction-style tenders for new capacity to create “sharp reductions” in capital costs that translate into an LCOE that has been slashed from over $220/MWh five years ago to well under $100/MWh today.
Giannakopoulou said: “The low prices promised by offshore wind tenders throughout Europe are now materialising, with several high-profile projects reaching financial close in recent months. Its cost decline in the last six months is the sharpest we have seen for any technology.”