LCOE for photovoltaics (PV) projected to decline until 2045

The latest edition of the Fraunhofer Institute for Solar Energy Systems (ISE) study highlights a pivotal moment in the energy landscape, revealing that the levelized cost of electricity (LCOE) from renewable energy sources, in particular photovoltaic (PV) systems combined with battery storage, will continue to decline until 2045. This downward trend in LCOE presents a promising outlook for the adoption of renewable technologies, positioning them as increasingly competitive alternatives to conventional coal- and gas-fired power plants.

© Fraunhofer ISE LCOE for renewables and conventional power plants at locations in Germany in 2024. A minimum and maximum value of the technology-specific LCOE is shown

Fraunhofer ISE has been meticulously calculating the LCOE for various power generation technologies since 2010, focusing on Germany. Recent analysis indicates that:
jinko

Cost competitiveness: For the first time, PV systems with battery storage have demonstrated lower LCOE compared to traditional fossil fuels. This shift underscores the economic viability of renewables in a decarbonizing energy market.
Expansion of LCOE analysis: The current study also includes LCOE assessments for emerging technologies such as agrivoltaics, hydrogen power plants, and advanced nuclear power systems, expanding understanding of energy cost dynamics.
Continued decline: Projections indicate that the LCOE of renewable technologies will continue to decline as advances in technology, economies of scale, and increased efficiency reduce production and operating costs.

The decline in the LCOE of renewables through 2045 will likely have several implications for the energy sector:

Increased adoption: As renewable energy becomes more affordable, utilities and investors are expected to increasingly favor these technologies over fossil fuel investments, accelerating the transition to a sustainable energy future. Grid integration challenges: With the rise of low-cost renewables, grid operators may face challenges integrating intermittent sources such as solar and wind into existing infrastructure, requiring investments in smart grid technologies and energy storage solutions.
Regulatory and policy support: Governments may need to enhance supportive policies and incentives to ensure continued growth of the renewable sector and facilitate the transition away from fossil fuels.

The continued decline in the LCOE of renewable energy sources, particularly photovoltaic systems with battery storage, positions these technologies as a cornerstone of future energy strategies. Looking ahead to 2045, continued advances in renewable energy will not only reshape the energy market but will also contribute significantly to global efforts to mitigate climate change and foster a sustainable energy future.

Sangita Shetty, solarquarter.com