New solar and onshore wind power plants have reached parity with average wholesale prices in California and parts of Europe.
Their levelized costs in China are below the average regulated coal power price, according to BloombergNEF (BNEF).
BNEF’s benchmark levelized cost figures for onshore wind and PV projects financed in the last six months are at $47 and $51/MWh, down 6 percent and 11 percent respectively compared to the first half of 2019.
For wind this is mainly due the fall in the price of wind turbines, 7 percent lower on average globally compared to the end of 2018.
In China, the world’s largest solar market, the Capex of utility-scale PV plants has dropped 11 percent in the last six months, reaching $0.57 million per MW. Weak demand for new plants in China has left developers and engineering, procurement and construction firms eager for business, and this has put pressure on Capex.
Some of the cheapest PV projects financed recently will be able to achieve an LCOE of $27-36/MWh. Those can be found in India, Chile and Australia. Best-in-class onshore wind farms in Brazil, India, Mexico and Texas can reach levelized costs as low as $26-31/MWh already.
Offshore wind has seen the fastest cost declines, down 32 percent from a year ago and 12 percent compared to the first half of 2019. The current global benchmark LCOE estimate is $78/MWh.
New offshore wind projects throughout Europe now deploy turbines with power ratings up to 10MW, unlocking Capex and Opex savings. In Denmark and the Netherlands, the most recent projects financed will achieve $53-64/MWh excluding transmission.
“As this all plays out, thermal power plants will increasingly be relegated to a balancing role, looking for opportunities to generate when the sun doesn’t shine or the wind doesn’t blow,” Tifenn Brandily, associate in BNEF’s energy economics team and the report’s author, said.