The Power to Change. Cost Reduction Potentials for Solar and Wind to 2025

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1 The Power to Change Cost Reduction Potentials for Solar and Wind to

2 2015: a record year for renewables #REmap 47 GW PV, 63 GW wind power installed more than 25% growth from the previous year More than half of all new power generation worldwide is renewable, since 2011! Despite low fossil fuel prices USD 360 bln investments (USD 330 bln for power) Cost continue to fall Solar PV USD 30-48/MWh in Dubai, Mexico, Peru Wind USD /MWh in Morocco and Peru 164 countries with RE policies in place The global energy transition is ongoing 2

3 But, we are still not moving fast enough.. 21 countries with 1 GW+ (in blue) 3

4 TURNING A CORNER 4

5 Will hindsight show the last year to have been a watershed? COP21 charts a future where renewables must play a key role Continuous new records for solar and wind PPA/tenders Countries realise under right conditions renewables are increasingly the cheapest option for new capacity 5

6 But, challenges remain very real. Large and persistent cost differentials for solar PV, although competitive pressures seem to be growing Still not always the cheapest option without considering environmental costs Next years absolutely critical to keeping open low climate change pathways For stagnant electricity markets, its about cost of transition 6

7 SO.. CONTINUED COST REDUCTIONS VITAL 7

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9 Costs will continue to fall for solar and wind power technologies to 2025 Large cost differentials Continued technology innovation Growing scale of markets Policy framework critical to unlocking largest savings

10 Methodology c-si -CdTe Top-down learning curve analysis Detailed bottom-up technologybased analysis Global average module selling price (2015 USD/W) 22% price reduction for each doubling of cumulative volume c Si price increase due to polysilicon shortage Cumulative production volume (MW) Approaches complement and inform each other Only utility-scale analysed LCOE (USDcent/kWh) gy yp ST 2015 Performance Improv.. O&M Co.. CAPEX (direct) CAPEX (indirect) Reference Availability Performa 2015 nce Impro vement O&M Costs Heliostat Field Power Block Receiver Thermal Storage Tower Indirect EPC Cost Owner's Cost Grand Total LCOE Total.. 10

11 Cost reduction potentials to 2025 By 2025, LCOEs could fall by: 26% for onshore wind, 35% for offshore wind, 37% for PTC, 43% for ST 59% for solar PV Will require the right policy and regulatory frameworks, adjustments will be needed from today s policy settings 11

12 Solar PV: Installed system costs to 2025 Large average cost reduction potential BoS dominates potential Will require action by policy makers

13 Solar PV: Reduction potential BoS Global weighted average utility-scale solar PV systems: BoS costs and cost reductions by source, BoS costs for utilityscale PV plants could fall by twothirds (with a range of 55-74%) to Driven by innovation, convergence towards best practice and increasing competitive pressures.

14 Solar PV: Reduction potential modules Current and potential future cost ranges for crystalline modules, By 2025, crystalline PV module costs could be in the range of USD 0.28 to USD 0.46/W (REmap 2030 PV capacity of 1750 to 2500 GW) and learning rates of 18-22%. A bottom-up, technologybased analysis of crystalline technologies points to costs falling to between USD 0.30 to USD 0.41/W by 2025, which also falls within this range.

15 Solar PV: Reduction potential modules Mono and multicrystalline silicon module cost reductions by supply chain source, The largest module cost reductions to 2025 are expected to come from: Polysilicon production (29-34%) The cell-tomodule value chain (28-35%)

16 Solar PV LCOE to USD/kWh Highly dependent on BoS convergence scenario

17 Solar PV: LCOE sensitivity to WACC Global utility-scale solar PV LCOE by WACC, The share of CAPEX in 2015 ranges from 81% at the lowest WACC to 92% at 10% WACC. In the 2025, operating costs are consistently higher share of LCOE of PV given rapid installed cost delcines WACC = Weighted-average cost of capital

18 Solar PV Costs in Africa Africa has a need for power: Solar resources make PV an excellent fit ~600 million lack access But cost structure is different from other regions Data collection challenging, but encouraging results Some markets relatively competitive Very small SHS cost structures are challenging Regional deep-dives necessary for greater clarity

19 Solar home systems: An economic solution In all sub-saharan countries, off-grid, SHS can compete with current lighting costs Annual off grid household expenditure on lighting and mobile phone charging compared to SHS (<1kW) annualized costs, by country (IRENA) 19

20 Cost reductions to continue The winners will be customers, the environment and future generations