Impact of weighted average cost of capital, capital expenditure, and other parameters on future utility‐scale PV levelised cost of electricity
Open accessAbstract
Solar 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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Renewable electricity costs further decline, and solar PV is projected to continue outstanding cost decline to historically unrivalled levels, enabling multiple power-to-X processes.
“Renewable electricity costs further decline [95], and thereof solar PV is projected to continue the outstanding cost decline to historically unrivalled levels [162] enabling multiple power-to-X processes [163].”
From Global Transportation Demand Development with Impacts on the Energy Demand and Greenhouse Gas Emissions in a Climate-Constrained World (2019) · cites this paper as [162]
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- Authors
- Vartiainen, E., Masson, G., Breyer, C., Moser, D., & Román Medina, E.
- Affiliations
- Fortum (Finland) (FI)
- Becquerel Institute Brussels Belgium
- Lappeenranta-Lahti University of Technology (FI)
- Eurac Research (IT)
- Tecnalia Bilbao Spain
- Corresponding author
- Vartiainen, Eero
- Venue
- Progress in Photovoltaics: Research and Applications
- Publisher
- Wiley
- Published
- 2019-08-29
- Volume
- 28
- Issue
- 6
- Pages
- 439-453
- ISSN
- 1062-7995 (ISSN-L)
- 1099-159X
- OpenAlex
- W2971325636
- Cited by
- 490
- References
- 31
- Citations by year
- 2026: 67 · 2025: 71 · 2024: 60 · 2023: 79 · 2022: 73 · 2021: 81 · 2020: 50 · 2019: 9
- FWCI
- 22.68
- Type
- journal article
- Language
- en
- Open access
- hybrid
- doi.org
- Licence
- Locations
- Progress in Photovoltaics Research and Applications (publishedVersion, cc-by)
- TECNALIA Publications (Fundación TECNALIA Research & Innovation) (submittedVersion, public-domain)
- Open Research (University of Surrey) (submittedVersion, cc-by)
- Topics
- Physical Sciences › Environmental Science › Environmental Engineering › Photovoltaic Systems and Sustainability
- Physical Sciences › Energy › Renewable Energy, Sustainability and the Environment › Renewable Energy and Sustainability
- Physical Sciences › Energy › Energy Engineering and Power Technology › Power Systems and Renewable Energy
- Keywords
- photovoltaics, levelized cost of electricity, weighted average cost of capital, capital expenditure, operating costs, utility-scale PV, European electricity market, sensitivity analysis, learning rate
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