New-build solar now cheaper than running existing coal power plants in China, India and most of Europe

La energía solar de nueva construcción ahora es más barata de operar que las centrales de carbón existentes en China, India y la mayor parte de Europa
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Cost-competitive renewable power challenges existing coal- and gas-fired power in countries accounting for almost half of both world population and power sector CO2 emissions, according to research company BloombergNEF’s (BNEF) latest LCOE update published today.

The 1H 2021 LCOE Update shows that PV has now passed a major new milestone versus coal. It was already cheaper to build and operate over their lifetime than new coal- and gas-fired power plants, for more than the two-thirds of the world’s population. But now, building and operating new utility-scale solar PV is cheaper than running existing coal plants in China, India and across most of Europe.

1H 2021 LCOE Update – Key findings

BloombergNEF’s estimates for the global benchmark levelized cost of electricity, or LCOE, for utility-scale PV and onshore wind fell to $48 and $41 per megawatt-hour (MWh) in the first half of 2021. These were down 5% and 7% respectively from the first half of 2020, and as much as 87% and 63% since 2010. These benchmarks conceal a range of country-level estimates that vary according to market maturity, project size, local financing conditions and labor costs. The lowest LCOEs in the first half of 2021 can be found in Brazil and Texas for onshore wind, and in Chile and India for PV, all at $22/MWh.

In China, the largest market for renewables, BNEF estimates the cost of building and operating a solar farm is now $34/MWh, cheaper than the cost of operating a typical coal-fired power plant at $35/MWh. Similarly in India, new solar can achieve a levelized cost of $25/MWh, compared to an average cost of running existing coal-fired power plants at $26/MWh. Combined, China and India account for 62% of all coal-fired power capacity worldwide. Together the two countries produce around 5.5 gigatons of CO2 annually, or 44% of global power sector emissions.

In Europe, the levelized cost of new-build solar ranges from $33/MWh in Spain and $41/MWh in France, to $50/MWh in Germany. It has come down by an average of 78% across the continent since 2014. This is much lower than typical running costs for coal and gas-fired power plants in the region, which we estimate at above $70/MWh in 2021. The cost of operating coal and gas plants in the EU has risen since 2018, as the bloc’s carbon price has doubled to over $50 per metric ton.

With economies starting to reopen and the demand for commodities picking up, the first half of 2021 has highlighted the critical role of materials pricing in the industries of the power transition. Global steel prices doubled year-on-year, affecting wind turbine costs. Polysilicon, the main feedstock for crystalline photovoltaic cells, has seen its price triple since May 2020.

In China and India, BNEF has tracked increases of 7% and 10% respectively in PV module prices since the second half of 2020. Similarly, wind turbine prices in India are up 5% over the last six months. But the impact of the commodity price hike has to be put in perspective. First, manufacturing, not materials, makes up most of the final costs for wind turbines, PV modules and battery packs. Second, supply chains will absorb part of that rise, before it affects developers. Third, some developers have longer-run purchase orders that might shield them against this rise for some time.

Source: BNEF