LONDON, August 4, 2017 /PRNewswire/ --
It is increasingly stated that renewable power generation costs are now lower than costs of traditional fossil fuel generation; furthermore, that the continued renewable generation cost decline will result in 'cheap' electricity for all.
Solar power is becoming increasingly competitive with coal-fired power generation; however, our analysis suggests that financial assistance for solar projects is still required for low solar power price agreements to be viable. The very serious negative externalities associated with coal-fired generation-climate change and air pollution-mean that such measures are absolutely warranted in order to encourage investment in renewables. In the absence of a comprehensive global policy agreement that accounts for these external costs, our analysis suggests that fossil fuel generation remains the cheaper form of electricity generation.
Historical cost comparisons
CRU has collected information on 34 commercial scale solar power plants that have been installed since 2010 in order to estimate the levelised-cost of electricity (LCOE). LCOE can include a variety of assumptions, however, in order to compare the true, underlying cost of power generation (i.e. before government or policy intervention), the methodology we have adopted does not account for any form of financial penalty (e.g. in the case of a carbon charge) or assistance from subsidy or favourable financing. We believe this approach provides a clearly defined framework on which the impact of policy decisions can be tested and a start point for any investment decision.
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