Solar PV Electricity Cost Reduction “Remarkable” – IRENA

Renewable Power Generation Costs

A new report from the International Renewable Energy Agency (IRENA) that includes information on Australia shows how much the cost of electricity from solar power and other renewables has dropped in recent years.

IRENA states the global weighted average levelised cost of electricity (LCoE) from utility-scale solar PV has plummeted 73% over 7 years – with further reductions to come.

Global weighted average costs over the last year for onshore wind and solar PV were USD 6 cents and USD 10 cents per kWh respectively. IRENA says the best onshore wind and solar PV projects will be delivering electricity for USD 3 cents per kWh (around AUD 3.8 cents at current exchange rates) or less by 2019, well below fossil-fuel based electricity generation prices.

The cost range in G20 countries during 2017 for fossil fuel-based electricity generation was estimated to be between USD 0.05 and USD 0.17/kWh.

Utility-scale PV’s remarkable performance has been primarily driven by an 81% decrease in solar panel prices since the end of 2009, along with reductions in balance of system (BoS) costs.

IRENA says all current commercially viable renewables technologies will fall within the cost range of fossil fuels or undercut them by 2020, with most at the lower end of the range.

“Turning to renewables for new power generation is not simply an environmentally conscious decision, it is now – overwhelmingly – a smart economic one,” said Adnan Z. Amin, IRENA Director-General.

Residential Solar Costs In Australia

The Renewable Power Generation Costs In 2017 report also mentions home solar power in Australia. IRENA’s figures indicate the average total installed cost of residential solar PV systems in this country had dropped 50% in the second quarter of last year compared to the second quarter of 2013.

Installed residential solar costs - Australia

The report states the levelised cost of electricity from Australian residential solar systems dropped 45% over the same period. While that’s impressive, the LCoE shown for Australia seems rather high; but it appears IRENA’s calculations are based on the assumption of a 7.5% cost of capital.

Levelised cost of solar electricity Australia

Total installed costs for commercial solar power (<500kW) in Australia have also seen a huge drop – 44% lower in Q2 2017 compared to Q2 2014. The LCoE of commercial solar in Australia had dropped 38% over the same period, and in Q2 last year was the lowest in the world.

The full Renewable Power Generation Costs in 2017 report can be downloaded here (PDF).

About Michael Bloch

Michael caught the solar power bug after purchasing components to cobble together a small off-grid PV system in 2008. He's been reporting on Australian and international solar energy news ever since.


  1. It depends on how the cost is assessed.

    When PV systems only last for 3 or 4 years before failing, with warranty protection being regarded as irrelevant by Australian statutory authorities, so that it costs 27c/kWh or more per kWh, for PV electricity, due to short life expectancy of PV systems, then it is not necessarily inexpensive, but is more, we people using our own money to try to protect the environment.

    Longer warranties, and, enforceable warranties, are needed in Australia.

    All PV components should have a minimum of ten years full, enforceable, warranty coverage.

    • Just wondering about this statement: “When PV systems only last for 3 or 4 years before failing”. I am on my 4th PV system spanning the past 20 years, and all are still pumping out electricity, two with battery packs, and the only failure I have had in the time is one cell failure in a single battery. Have I just been lucky?

  2. All pretty meaningless without some definitions.
    – What is the difference between “levelised cost” and “weighted average cost”?
    – Are these figures for commercial PV the marginal cost of generation?
    – Or are they the expected unit cost over the anticipated life of the plant?
    – Do they reflect the government subsidies given to build the plants?
    – Do they include a cost for batteries or “Snowy2” schemes to provide system resilience?
    – Do they include a cost for additional electrical distribution infrastructure?
    – When IRENA says ““Turning to renewables for new power generation is … now –overwhelmingly– a smart economic one” is that statement justified by comparing like with like ie a new high efficiency coal-based station on the site of an existing station, providing resilience and no new distribution infrastructure needed, against a new PV station with infrastructure to give resilience and distribute the power generated?
    – Or is IRENA just comparing the cost of a zero-resilience PV farm with the cost of power from a fifty year old coal station?

  3. “Global weighted average costs over the last year for onshore wind and solar PV were USD 6 cents and USD 10 cents per kWh respectively. IRENA says the best onshore wind and solar PV projects will be delivering electricity for USD 3 cents per kWh (around AUD 3.8 cents at current exchange rates) or less by 2019, well below fossil-fuel based electricity generation prices”

    It’s great that the prices have dropped so significantly. Wind and solar are intermittent sources so one would need to factor in storage costs also? Only when battery costs become much lower and all subsidies lifted will these systems be truly economically comparable in an apples for apples way.

    • Richard Kirby says

      You don’t need to take into account storage. Renewables are part of a mix that supplies power to the grid. When the mix gets to a certain level storage is considered necessary. Storage can be delivered in a number of ways, hydro or batteries are an example. Smarter more efficient grids will allow more renewables in the mix.

      • Richard
        I believe we are already at (if not already past) the point at which storage for resilience needs to be taken into account. That’s why the South Australian government said “Oh, s**t” and squandered a heap of money on some diesel generators to back up its too-small-to-do-any-good Tesla battery.

        As for hydro, the only sizeable option on the table is Snowy2, which will take years to design and build; will be a nightmare to maintain and which will cost as much as a couple of brand new coal fired super-high efficiency stations (which come with the added advantage that they can actually generate power 7*24 and don’t need a squillion panels to power them).

        If you think my estimate of the cost of Snowy2 is too high, look at the likely costs of NBN and NDIS, compared to the initial headline estimates, and ask yourself if government estimation has miraculously improved over the last few years, and that 2 billion is a realistic estimate for a one-off, never-been-anything-like-it project.

        Ten, fifteen years ago we had a bunch of coal powered generators selling power at $40 per megawatt hour. Now, despite all these getting-cheaper-by-the-week solar and wind generators the wholesale price of electricity is $100-$120 dollars per megawatt hour in NSW and Vic.

        The only reason coal fired stations are going down the tubes is that successive governments have undermined their economic underpinnings by mandating retailers must supply a minimum percentage of their customers with “green” power, and by paying huge subsidies to wind and solar schemes (eg NSW 60 cents per kilowatt hour FIT). Without all this “high on emotion, low on economics” stupidity we could still be enjoying a $40 per megawatt wholesale price, consumers would be better off, and industry would not be going broke.

        And before you say “but we’re saving the planet…” may I remind you that China’s increase in emissions has dwarfed all the emissions-saving from Australia, since we lost our senses and embraced the Paris agreement. It’s all been for nothing, and no manufactured figures from IRENA can disprove that.

        • Richard Kirby says

          Smart grids can handle way more, Great Britain can handle 50%+ renewable for 65M people. Technology is always the answer.

          In terms of climate change I can only offer an analogy:

          Imagine you take a trip with your entire family, their kids and their grandkids. You reach a bridge. Near the bridge there are 1000 structural engineers, 999 of which tell you not to cross. Then there is one guy that states “nah mate, this bridge is fine”. What do you do? Sure going round is costly, takes time and is annoying as hell but what choice do you have? It’s a simple risk vs reward decision.

          Let’s not cross the bridge people.

  4. Great that costs are down. Why o n earth do we still need tax payers to subsidise industry. Surely billions spent on random introduction of solar would be better spent on securing the energy system for everyone, including those who can’t afford solar.

    • Glen Bruton says

      Thats fine Evan Jones. As long as subsidies are removed from renewables AND coal/oil. You’ll find the tax breaks given to those are far higher than those given to renewables.

      • Can you point out what these subsidies for coal and oil are Glen? In Australia both products are taxed, especially oil which is the opposite of a subsidy. Mining is also taxed, as are all business operations. Are you referring specifically to exports?

        I totally agree with you that all energy subsidies should be axed BTW.

  5. The graph on residential costs per/watt for solar wasn’t real clear. Just kind of provided a summation. Just curious what the typical price per watt is in AUS currently, for residential and does it vary much by region? Here in Florida we are averaging between USD 2.4 – 2.7 p/w depending on complexity and solar panels selected, etc. Thx

    • Ronald Brakels says

      Before tax or subsidy the average cost of installing solar is likely to be under $1.30 US per watt in Australia.

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