Solar, wind costs to decline through 2020

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Significant cost reductions are making renewable energy increasingly competitive with fossil fuels in countries across the world.

The rapid growth in the deployment of solar and wind is driving a convergence in electricity generation costs. When abundant local resources are available, mature technologies such as biomass, geothermal and hydropower can all produce electricity at very competitive costs, although in limited amounts.

As the deployment of wind and solar has increased, there is a reduction in the cost of wind and solar technologies and a convergence in the levelized cost of electricity (LCOE) of renewable technologies at low levels. This will continue in the short- to medium-term given the current manufacturing overcapacity for wind and solar PV, according to research from the International Renewable Energy Agency (IRENA).

Equipment cost reductions can be expected through 2020, according to IRENA, which will lower the weighted average the LCOE of renewables. IRENA research contends that the rate of decline for solar PV through 2020 is likely to be slower than in recent years, but wind and CSP may speed up. Hydropower, geothermal and most biomass combustion technologies are mature and, thus, have little potential for cost reductions.

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