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BNEF reports that constructing new solar plants is now cheaper than constructing and operating coal plants in Europe and Asia.
- In Europe, solar costs may reach $50/MWh compared to gas and coal-fired plants, exceeding $70/MWh this year.
According to the latest update in the levelised cost of energy (LCOE) by BloombergNEF (BNEF), solar power is now cheaper than coal-generated energy in China, India and most of Europe.
The report notes that in H1 2021, the global benchmark LCOE for utility-scale solar photovoltaic (PV) and the onshore wind dropped by 5 per cent and 7 per cent Year on year to $48 and $41 per MWh, respectively. According to BNEF’s analysis, the cost of constructing and operating a solar power plant in China is $34/MWh compared to the cost for a coal-fired power plant at $35/MWh. In India, the LCOE of newly installed solar PV is as low as $25/MWh, compared to the current average cost of existing coal-fired power plants at $26/MWh. In Europe, solar costs vary from $33/MWh in Spain and $41/MWh in France to $50/MWh in Germany compared to gas and coal-fired plants, which exceeds $70/MWh this year.
The lowest LCOE amount recorded during the first half of the year was as low as $22/MWh recorded in Brazil and Texas for onshore wind and in Chile and India for solar PV. While the price of solar and wind generation components has increased in recent months, BNEF says that the rise does not reflect an increase in LCOE benchmarks yet. However, BNEF notes that a sustained increase could increase the LCOE for these clean energy plants.
BNEF considers manufacturing and not materials as the major contributor to the final costs for wind turbines, PV panels and battery packs. The increase in prices is also expected to be absorbed by the supply chain protecting developers from the price spike for a while at least.