The Cost of Renewable Power: A Survey of Recent Estimates - Green Energy and Efficiency: An Economic Perspective - page 232

those who stick to the old way of producing and generating energy. The effects may
be felt more quickly in some elds, notably electricity, and more slowly in trans-

portation, but all will be affected sooner rather than later. The impacts will also be
different depending on the stage of development of each economy, since renewable
power requires a different type of network, which must be suitable for off-grid
production and consumption. Thus, emerging and even less developed countries
enjoy a comparative advantage precisely because their grids are not so well
developed.
The paper focuses on costs for several reasons. First, they are a simple and
effective way to compare different technologies from an economic standpoint,
covering renewables and also fossil fuels. It is important that the measures chosen
are clearly de ned and can also be estimated precisely and homogeneously, i.e.

comparably. This is why all research focuses on the Levelised Cost of Energy
(LCOE), a widely accepted measure in the industry, which enables useful com-
parisons to be made across technologies, geographical sites and different research
studies. It is important to remark from the start that no externalities of any kind are
considered, and in particular no subsidies or any other form of public support. For
the sake of comparison, an equivalent measure for fossil-fuel generated power is
presented in which subsidies are not considered either [ 15 ]. Second, several
renewable technologies are still not competitive at market prices, and that is why an
analysis based on measures of return rates is not yet possible, though this is quickly
changing, as is discussed below.
Renewable power generation costs are declining quickly in some cases, so it is

dif cult to keep well informed and up to date. This lack of information and the

sometimes negative perceptions about costs and characteristics have a negative
impact on their deployment. For investors this implies a greater risk, and thus
requires higher rates of return. But with precisely up-front capital cost being the
main cost component in the case of renewables this has a major impact on the

nal

cost of many projects these points are discussed at some length in the following

sections. Governments lack the information that they need to design effective or less
costly support policies, and provide consumers, and indeed society as a whole
(which may be susceptible to unfounded negative perceptions and prejudice) with
objective information.
The paper focuses only on electric power, omitting heating power and trans-
portation. Also, only technologies for which suf

—

cient data are available are con-
sidered. This is why solar thermal technology, all forms of sea power technology
and most bio-energy sources, among others, are not considered. This should in no
way be taken as meaning that they are not signi

cant, or at least will not become so
in the near or distant future in the cases of those that are currently at the research or
demonstration stages.
As noted in one of the research reports analysed

“

Any quantitative report or
study is only as good as the data and other information used for its production

”
[ 41 ]. Accordingly, the results presented here come from a variety of studies, but are
mainly based on the Irena costs series, which in turn are derived from their
extensive data base of around 8,000 medium to large-scale commissioned and