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The Power to Change

Cost Reduction Potentialsfor Solar and Wind to 2025

#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 30-37.5/MWh in Morocco and Peru

◉ 164 countries with RE policies in place

◉ The global energy transition is ongoing

2015: a record year for renewables

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But, we are still not moving fast enough…..

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21 countries with 1 GW+ (in blue)

TURNING A CORNER

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Will hindsight show the last year to have been a watershed?

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Continuous new records for solar and wind PPA/tenders

Countries realise under right conditions renewables are increasingly the cheapest option for new capacity

COP21 charts a future where renewables must play a key role

But, challenges remain very real….

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Still not always the cheapest option without considering environmental costs

Next 10-15 years absolutely critical to keeping open low climate change pathways

Large and persistent cost differentials for solar PV, althoughcompetitive pressures seem to be growing

For stagnant electricity markets, its about cost of transition

SO…..

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CONTINUED COST REDUCTIONS VITAL

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Continued technologyinnovation

Growing scale of markets

Costs will continue to fall for solar and wind power technologies to 2025

Large cost differentials

Policy framework critical to unlocking largest savings

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Methodology

Top-down learning curve analysis

Detailed bottom-up technology-based analysis

Approaches complement and inform each other

gy ypST

2015 Performance Improv.. O&M Co.. CAPEX (direct) CAPEX (indirect)GrandTotal

Reference2015

Availability Performance Impro

vement

O&MCosts

HeliostatField

PowerBlock

Receiver ThermalStorage

Tower IndirectEPC Cost

Owner'sCost

Total0

5

10

15

LCO

E (U

SD

cent

/kW

h)LCOE ..

2015-..

1992

19982002

2004

2011

2014

2025

0.10

1.00

10.00

100.00

1 10 100 1000 10000 100000 1000000

Global average module selling price (2015 USD/W)

Cumulative production volume (MW)

2006 c‐Si price increasedue to polysilicon shortage

22% price reduction for each doubling of cumulative volume

2006 c‐Si price increasedue to polysilicon shortage

22% price reduction for each doubling of cumulative volume

2006 c‐Si price increasedue to polysilicon shortage

22% price reduction for each doubling of cumulative volume

‐ c-Si- CdTe

2006 c‐Si price increasedue to polysilicon shortage

22% price reduction for each doubling of cumulative volume

Only utility-scale analysed

Cost reduction potentials to 2025

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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 willbe needed from today’s policy settings

Solar PV: Installed system costs to 2025

BoS dominates potential

Will require actionby policy makers

Large average costreduction potential

BoS costs for utility-scale PV plantscould fall by two-thirds (with a range of 55-74%) to 2025.

Driven by innovation, convergence towards best practice and increasing competitive pressures.

Global weighted average utility-scale solar PV systems: BoS costs and cost reductions by source, 2015-2025

Solar PV: Reduction potential BoS

By 2025, crystalline PV module costs could be in the range of USD 0.28 to USD 0.46/W (REmap2030 PV capacity of 1750 to 2500 GW) and learning rates of 18-22%.

A bottom-up, technology-based 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.

Current and potential future cost ranges for crystalline modules, 2015-2025

Solar PV: Reduction potential modules

The largest module cost reductions to 2025 are expected to come from:• Polysilicon

production (29-34%)

• The cell-to-module value chain (28-35%)

Mono and multicrystalline silicon module cost reductions by supply chain source, 2015-2025

Solar PV: Reduction potential modules

Solar PV LCOE to 2025

2015

US

D/k

Wh

Highly dependent on BoS convergence scenario

The share of CAPEX in 2015 ranges from 81% at thelowest WACC to 92% at 10%WACC.

In the 2025, operating costs are consistently higher share of LCOE of PV given rapid installed cost delcines

Global utility-scale solar PV LCOE by WACC, 2015-2025

Solar PV: LCOE sensitivity to WACC

WACC = Weighted-average cost of capital

Solar PV Costs in Africa

Africa has a need for power: Solar resources make PV an excellent fit

But cost structure is different from other regions

• Some markets relatively competitive

• Very small SHS cost structures are challenging

Data collection challenging, but encouraging results

• Regional deep-dives necessary for greater clarity

~600 million lack access

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Solar home systems: An economic solution

Annual off‐grid household expenditure on lighting and mobile phone charging compared to SHS (<1kW) annualized costs, by country (IRENA)

In all sub-Saharan countries, off-grid, SHS can compete with current lighting costs

www.irena.orgmtaylor@irena.org

Cost reductionsto continue

The winners will be customers, the environment and future generations