Study

Study: Levelized Cost of Electricity- Renewable Energy Technologies

Dr Christoph Kost, Fraunhofer ISE

The study compares the present costs for conversion of different energy forms into electricity and gives a prognosis for the further cost development up to 2035. The scientists in Freiburg analyze both the levelized cost of electricity (LCOE) from renewables as well as from conventional energy technologies. They present comparative figures for new power plants constructed in Germany, which are based on solar, wind energy and biogas as well as brown coal, hard coal and gas.

The study was carried out in the research topic Energy System Analysis and is also available in german language.

As commissioned by the German embassy in Cairo, the Fraunhofer Institute for Solar Energy Systems ISE, in cooperation with SolarizEgypt, has also calculated the electricity generation costs (LCOE) for renewable technologies and conventional power plants in Egypt. The full study (December 2016) is available in english and arabic language.

The key findings of the study in short:

LCOE of renewable energy technologies and conventional power plants at locations in Germany
© Fraunhofer ISE
LCOE of renewable energy technologies and conventional power plants at locations in Germany in 2021.
LCOE forecasts, based on learning curve model, for renewable energy technologies
© Fraunhofer ISE
LCOE forecasts, based on learning curve model, for renewable energy technologies and gas-fired power plants in Germany until 2040. The yearly LCOE value refers to one new plant in the reference year.
  • Currently, the LCOE of photovoltaics ranges from 3.12 to 11.01 €Cent /kWh, depending on the type of plant and the solar irradiation, and the specific plant costs range from 530 to 1600 €/kWp, depending on the plant type.

  • Photovoltaic systems with battery storage are a growing market in the German energy system and therefore were included in the study for the first time. Today the LCOE of hybrid PV-battery systems ranges from 5.24 to 19.72 €Cent /kWh. This wide cost range is due to the large price difference of the various battery systems.

  • In the case of wind power, the LCOE of onshore wind turbines ranges between 3.94 and 8.29 €Cent /kWh, making them the second cheapest technology for electricity generation today. This decrease is due to falling plant costs. Offshore wind turbines are significantly more expensive at 7.23 to 12.13 €Cent /kWh, despite the higher annual mean full load hours (FLH) of up to 4500 hours per year. The energy generation costs of offshore wind are higher because of the more costly installation, operating and financing (3000 to 4000 €/kW).

  • The forecasts show that new conventional power plants built in Germany will not achieve an LCOE below 7.5 €Cent /kWh, taking the higher CO2 prices into account.

  • Forecasts show that in 2040, the LCOE will be between 3.58 and 6.77 €Cent €Cent/kWh for small rooftop systems and between 1.92 and 3.51 €Cent €Cent/kWh for ground-mounted PV systems. As of 2024, the LCOE is expected to be below 10 €Cent €Cent/kWh for all PV systems (excluding the battery storage).

  • In 2030, the cost of electricity generation from a PV-battery system is projected to be cheaper than a combined cycle power plant. In 2040, even small PV-battery systems are expected to achieve an LCOE between 5 and 12 €Cent €Cent/kWh.