Renewable power technologies : A path to meet climate goals and secure energy transition .
Exhibit 4
The evolution of Solar technology : a cutting-edge technology responsive , evolving to meet requirements of the renewable energy markets .
USD / kwh
Biomass Geothermal Hydropower Solar PV Solar Thermal Onshore Wind Offshore Wind
0,400
0,300
0,200
Maximum price : 0.140 USD / kwh
0,100
Fossil fuel power cost range
Minimum price : 0.045 USD / kwh
2010 2016 2010 2016 2010 2016 2010 2016 2010 2016 2010 2016 2010 2016
Average Price 0,056 $/ kwh 0,081 $/ kwh 0,047 $/ kwh 0,064 $/ kwh 0,035 $/ kwh 0,051 $/ kwh 0,347 $/ kwh 0,131 $/ kwh 0,301 $/ kwh 0,242 $/ kwh 0,071 $/ kwh 0,056 $/ kwh 0,133 $/ kwh 0,123 $/ kwh
Notes : Weighted Average cost of capital was set at 7.1 % for OECD and China , however for the rest of the World IRENA set the WACC at 10 %.
Source : IRENA database 2017 .
Governments usually takes steps to enable access to low cost of capital with macroeconomics policies dedicated to accelerate investment in renewable technologies . Different types of macroeconomics policies will permit to gain tax incentives or guarantee improving attractiveness of renewable energy . According to the exhibit 4 , we clearly underline the evolution of solar energy in the recent years with a levelized cost of energy appealing for most of the industrial actors .
On the other hand , project profitability is entirely related to the process of determining the cost of the energy system . With a low cost of energy , investment could obtain a better chance to be successful and profitable for investors due to the relationship between weighted average cost of capital and energy costs
Moreover , the levelized cost of energy also called LCOE shows a shift in the renewable energy market : solar PV has fallen by appoximately 60 % from 2010 to 2016 which underscore the attractiveness of solar PV . Hydropower and Geothermal energy stays at the top due to their low costs respectively evaluated at $ 0.051 and $ 0.064 per kwh , a small price that allow major industrial actors to stay competitive internationaly in terms of productivity and distribution of goods and services . However , we believe that solar PV can lead the renewable energy market due to the technological progress accomplished during the years . LCOE is a common indicator used to compare the average cost per kwh between different technologies but we can find it quite limited if we wish to analyze deeply project profitability regarding a future investment . That ’ s why new tools appeared to be more responsive to meet investment criteria , Lazard developed a tool to include the cost of storage which helps investors seeking to diversify their investment in renewable energy . This indicator also known as LCOS ( Levelized cost of storage ) study analyzes the levelized costs associated with the leading energy storage technologies given a single assumed capital structure and cost of capital , also including appropriate operational and cost assumptions . More simply , this indicator takes account of a wide range of costs such as operational and capital costs to define the real aveage price of each kwh produced by the technology , even the storage costs can be included to really underline energy storage role : its impact on the energy costs and the WACC of each project .
Clean energy investment : A transition towards renewable energy to conceptualize a post-oil city .
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