Future Cost of Energy Production from Renewables

12.30.10

Shehu Khaleel, Electrical Engineer

Given the fact that the world markets are so highly dependent on fossil fuels and that the costs of these are becoming epileptic, for economies and consumers, the outlook for renewable looks promising.


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The renewable energy technologies for power generation are currently at different stages of technology development, with hydropower already a sophisticated technology and onshore wind and some biomass power well established across the globe. As they mature and widely deployed, offshore wind, concentrating solar thermal power and solar PV, geothermal, and marine power are also becoming less costly. Following hydro, wind, and biomass, all RE technologies are becoming cost-competitive with other low-carbon technologies in electricity generation.

It is expected by 2050, a substantial part of the technical global power potential of Renewable Energy sources could be transformed into electricity at costs between US$0.05 and US$0.10/kWh3. The potential of producing power on plant site from renewable at a cost below 10 cents per kWh would amount to 600 TWh per year. Solar has the largest potential. Concentrating solar thermal power (CSP) and solar photovoltaic's (PV) could together produce 450 TWh.

Approximately 100 GWh of this electricity could be produced at costs below US$0.05/kWh, mostly from onshore wind, biomass, and solar CSP in favorable locations, as well as hydropower and even some geothermal technologies.

Apart from this there is still some unexploited potential of hydropower at relatively low cost. About a third of the onshore wind potential also has low production costs. Offshore wind power is expected to be available at specific locations at below US$0.10 /kWh. For geothermal power generation most of the potential is in geologically active and the cost is expected to be below US$0.10 /kWh. Its high capacity factor (in the 90 percent range) often makes geothermal an attractive option.

Solar power is a rapidly maturing Renewable Energy technology for electricity generation. It is expected that costs can be cut by more than 50% relative to current demonstration projects. Production, however, would be concentrated in areas with very high solar insolation. By 2050, large parts of the abundant solar PV potential will be available at below US$0.10 /kWh, also in regions with medium intensity of sunlight.

Since the most promising ocean power technologies are still at an early stage of development, their costs are still uncertain. It is expected that some costs will be below US$0.15 /kWh and may even be lower in places with strong tides and regular waves.

Modern biomass sources have a high technical potential for electricity production at low cost. Most of the biomass crop potential can be transformed to electricity at low cost when very low feedstock costs are assumed. Residues offer additional low-cost opportunities. In the estimates presented here, most of the primary biomass sources from crops and residues would be used for electricity generation. If, however, a considerable part of the biomass potential were allocated to transport fuel, the potentials for electricity generation would be that much lower.

The production cost of transport fuels from biomass is competitive with that of fuels from crude oil. Ethanol from biomass will cost between US$0.25 and 0.35 (from sugar cane) and US$0.40 to 0.60 (from various kinds of lignocelluloses, the next generation technology) per liter equivalent to gasoline. Biodiesel is expected to cost between US$0.40 (animal fats and vegetable oils) and US$0.65 to 0.80 when produced from residues or short rotation forestry crops. These biofuels become increasingly competitive with gasoline and diesel when oil prices pass the US$45 per barrel threshold.

Production costs depend not only on the production process, but also on the costs of transporting the feedstock. Therefore, collecting all the biomass feedstocks for producing fuels in industry-size production would become increasingly costly. Therefore, fuel-cost considerations, apart from competing uses of feedstocks for heat and electricity, would determine the availability of biofuels.

Biomass can provide heating at US$5/GJ (residues) to US$30/GJ (pellets) and provides the most cost-competitive renewable energy technologies for heating applications.

Geothermal heat pumps based on shallow geothermal systems applied for both heating in winter and cooling in summer can be cost-competitive at approximately 25US$/GJ. Deep geothermal energy, were it easily accessible, would be the cheapest power source. Solar thermal water and space heating in 2005 cost on average 60 US$/GJ in industrialized countries and much less in China. Costs are expected to drop by 40% in industrialized countries by 2030. Solar-assisted cooling cost up to 400 US$/GJ in 2005, but is expected to see a reduction of around 50% by 2030.