Renewable Energy – Market Developments And Costs

Strong growth in renewable energy markets suggest that significant "maturing" of technologies is occurring. In the five years to 2010 average photovoltaic system costs have declined by 48% and module costs by 41%. Industry expects costs to fall further based on the growth driven by current government support policies, reforms and removal of market barriers. Onshore wind investment costs fell by 10% between 2008 and 2012. Photovoltaic systems and onshore wind production are expected to be competitive in several markets by 2020. Achieving competitiveness, however, requires political commitment to regulatory frameworks that support industrial policy, technology development and removal of market distortions. Other technologies follow different maturity paths but their capital costs are in general also expected to fall.

It is important that we continue to use every tool at our disposal to drive down costs, to ensure renewable energy technologies become competitive and ultimately market driven. Policies which hinder investment in renewables should be revised and in particular, fossil fuel subsidies should be phased out. In view of the complementarity of climate and renewable energy policies, a well-functioning carbon market is necessary  together with properly designed energy taxes to give investors clear and strong incentives to invest in low carbon technologies and their development. At the same time renewable energy should be gradually integrated into the market with reduced or no support, and should over time contribute to the stability and security of the grid on a level footing with conventional electricity generators and competitive electricity prices. In the longer term, a level playing field needs to be ensured.

Source: European Commission

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