Dec 07, 2020 07:00:00

Why did the cost of generating renewable energy fall so rapidly?

Shifting the energy source used for power generation from conventional fossil fuels to

renewable energy is important for reducing the impact on climate change and realizing a sustainable society. In recent years, the cost of solar power generation and wind power generation has dropped significantly, and Max Roser, the founder of Our World in Data , a media that publishes data on global issues, said that renewable energy Explains why the cost of power generation using is rapidly decreasing.

Why did renewables become so cheap so fast? And what can we do to use this global opportunity for green growth? --Our World in Data
https://ourworldindata.org/cheap-renewables-growth

At the time of writing, fossil fuels account for 79% of the world's energy sources, but Fossil fuels are not sustainable and unsafe, Roser said. The graph below shows 'the number of people who die from producing 1 terawatt hour of energy' on the left side and 'the amount of carbon emitted by producing 1 gigawatt hour of energy' from the top.・ Oil, natural gas, biomass, hydropower, nuclear power, wind power, and solar power are arranged in this order. Looking at the graph, we can see that fossil fuels such as coal, oil, and natural gas cause many deaths and emit a large amount of carbon. Electric power is just one of the various forms of energy, and 'energy' in this graph does not mean only electric power.

The high death toll from fossil fuels is due to the air pollution caused by burning fossil fuels, which causes a variety of illnesses. It is said that 3.6 million people die annually from air pollution caused by fossil fuels, which is six times the number of deaths including murder, war and terrorist attacks. In contrast, renewable energies such as biomass, hydro, wind and solar are safer and more eco-friendly than fossil fuels and appear to be very promising sources of energy.

However, fossil fuels are still the main source of energy in many situations, including power generation, with coal accounting for 37% and gas accounting for 24% of the world's electricity supply. Combustion of fossil fuels for electricity and heat accounts for 30% of the world's greenhouse gas emissions. Roser pointed out that fossil fuels once dominated the planet because they were cheaper than all other energy sources. He argues that in order for renewable energy to replace fossil fuels, the 'cost of power generation' needs to be low.

The graph below shows how the price of electricity per megawatt generated from gas, coal, and nuclear power changed from 2009 to 2019. Electricity prices are expressed as the '

equalized cost of energy (LCOE) ', which is the minimum price that customers should pay to prevent a loss from the construction cost, useful life, and continuous operation cost of a power plant . Looking at the graph, we can see that the cost of coal power generation (black) has remained almost unchanged in 10 years, the cost of gas power generation (purple) has decreased, and the cost of nuclear power generation (green) has increased. LCOE is an important indicator when constructing new power generation facilities, as power generation companies cannot win the market competition unless they produce electricity as cheaply as possible.

This is the graph above, which overlays the LCOE of solar power generation (orange), power generation using the

solar updraft tower (yellow), geothermal power generation (red), and onshore wind power generation (blue). As of 2009, the cost of solar power was 229% higher than coal-fired power and 22% higher for onshore wind, but in just 10 years the price dropped sharply for solar and onshore wind. You can see that it is cheaper. Demand for solar and wind power has increased significantly as the LCOE declined, with solar and wind power accounting for 72% of the capacity of newly built power plants in 2019. That thing.

To find out why renewables are cheaper than fossil fuels, we need to think about the cost of generating electricity. The cost of power generation using fossil fuels and nuclear power depends largely on the price of fuel used for power generation and the operating cost of the power plant. On the other hand, power generation using renewable energy basically does not cost fuel and the operating cost is relatively low, so it seems that the actual power generation cost depends on the 'cost of power generation technology itself'. ..

Roser says we need to look back at the history of solar power as to why the cost of solar power has fallen sharply. As of 1956, when solar power generation technology was first put into practical use, the cost per watt was about $ 18,65 (about 190,000 yen) when converted to modern prices, which is very competitive with power generation using fossil fuels. It wasn't possible. It was thought that research would stop because 'photovoltaic power generation is not profitable' if nothing is done, but because photovoltaic power generation had the advantage of 'power generation in outer space', the satellite could be powered. It is said that research was carried out for the purpose of supplying electricity.

Even though it is a niche, the production process will gradually improve as the photovoltaic modules are repeatedly produced due to the demand for photovoltaic power generation. This has reduced the cost of producing PV modules, which in turn has reduced the cost of PV, Roser said. In the 1970s, when prices fell sharply compared to the early days, solar power was adopted in lighthouses and railroad facilities in 'remote areas where the cost of connecting to the power grid is high.'

As photovoltaic power generation facilities are deployed not only in space but also on the ground, the price of photovoltaic power generation modules will further decrease. The graph below shows the price of PV modules per watt converted to modern prices, with the vertical axis showing the price and the horizontal axis showing the cumulative capacity of PV facilities worldwide. In 1976, when the cumulative capacity of the world was only 0.3 MW, the price of the photovoltaic module was $ 106 per watt (about 11,000 yen), but the cumulative capacity exceeded 100,000 MW. In 2019, it was only $ 0.38, down 99.6% in the last half century.

This graph shows the experience curve effect that the price of the PV module decreases exponentially as the capacity of the PV equipment increases exponentially, and when the cumulative capacity is doubled, the module price is 20.2. Roser points out that there is a% reduction relationship.

In addition, not only is the price of photovoltaic modules cheaper, but the LCOE of photovoltaic power generation is also dropping sharply. In the graph below, the vertical axis shows the LCOE and the horizontal axis shows the cumulative capacity of the power generation equipment, and you can see that the LCOE for photovoltaic power generation (orange) becomes cheaper as the cumulative capacity increases. Similarly, offshore wind (light blue) and onshore wind (dark blue) have empirical curve effects, while LCOE for nuclear power increases as cumulative capacity increases, and coal-fired power remains almost flat.

Roser cites the reasons why LCOE does not follow the experience curve effect in coal-fired power generation, such as 'there is no room for significant improvement in power plant efficiency' and 'it is highly dependent on fuel prices'. In addition to the same restrictions as coal for nuclear power generation, the LCOE increased due to the tightening of regulations due to safety issues. Among fossil fuels, gas-based power generation has an exceptional decrease in LCOE, but this is due to the decrease in gas prices, and it cannot be said that it will continue to decrease in the future.

Roser repeatedly emphasizes that 'renewable energies follow the experience curve effect, while fossil fuels do not.' In other words, further scaling up renewable energy not only reduces carbon emissions, but also further reduces power generation costs, and the introduction of renewable energy has both environmental and economic benefits.

Lower renewable energy costs mean that people will be able to get electricity cheaper and that demand for renewable energy will increase in developing countries with low average incomes. In recent years, the demand for solar power generation has been increasing rapidly in the sunny developing countries of Africa and Asia, and the cost of power generation using renewable energy will continue to decline. “Construction of power plants using renewable energy is the key to rapidly reducing greenhouse gas emissions, and people with the side effect of saving people from air pollution and lowering energy prices. Income will increase and poverty will decrease, 'Roser said.