Impact of weighted average cost of capital, capital expenditure, and other parameters on future utility‐scale PV levelised cost of electricity

Eero Vartiainen; Gaëtan Masson; Christian Breyer; David Moser; Eduardo Román Medina

doi:10.1002/pip.3189

journal article Open Access Aug 29, 2019

Impact of weighted average cost of capital, capital expenditure, and other parameters on future utility‐scale PV levelised cost of electricity

Eero Vartiainen

Gaëtan Masson Christian Breyer

David Moser Eduardo Román Medina

Progress in Photovoltaics: Research and Applications Vol. 28 No. 6 pp. 439-453 · Wiley

View at Publisher Save 10.1002/pip.3189

Abstract

AbstractSolar photovoltaics (PV) is already the cheapest form of electricity generation in many countries and market segments. Market prices of PV modules and systems have developed so fast that it is difficult to find reliable up to date public data on real PV capital (CAPEX) and operational expenditures (OPEX) on which to base the levelised cost of electricity (LCOE) calculations. This paper projects the future utility‐scale PV LCOE until 2050 in several European countries. It uses the most recent and best available public input data for the PV LCOE calculations and future projections. Utility‐scale PV LCOE in 2019 in Europe with 7% nominal weighted average cost of capital (WACC) ranges from 24 €/MWh in Malaga to 42 €/MWh in Helsinki. This is remarkable since the average electricity day‐ahead market price in Finland was 47 €/MWh and in Spain 57 €/MWh in 2018. This means that PV is already cheaper than average spot market electricity all over Europe. By 2030, PV LCOE will range from 14 €/MWh in Malaga to 24 €/MWh in Helsinki with 7% nominal WACC. This range will be 9 to 15 €/MWh by 2050, making PV clearly the cheapest form of electricity generation everywhere. Sensitivity analysis shows that apart from location, WACC is the most important input parameter in the calculation of PV LCOE. Increasing nominal WACC from 2 to 10% will double the LCOE. Changes in PV CAPEX and OPEX, learning rates, or market volume growth scenarios have a relatively smaller impact on future PV LCOE.

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Details

Published: Aug 29, 2019
Vol/Issue: 28(6)
Pages: 439-453
License: View

Authors

E

Eero Vartiainen

Fortum Growth Oy Espoo Finland

G

Gaëtan Masson

Becquerel Institute Brussels Belgium

C

Christian Breyer

School of Energy Systems LUT University Lappeenranta Finland

D

David Moser

Institute for Renewable Energy Eurac Research Bolzano Italy

E

Eduardo Román Medina

Tecnalia Bilbao Spain

Cite This Article

Eero Vartiainen, Gaëtan Masson, Christian Breyer, et al. (2019). Impact of weighted average cost of capital, capital expenditure, and other parameters on future utility‐scale PV levelised cost of electricity. Progress in Photovoltaics: Research and Applications, 28(6), 439-453. https://doi.org/10.1002/pip.3189

Impact of weighted average cost of capital, capital expenditure, and other parameters on future utility‐scale PV levelised cost of electricity

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