Although new wind and solar power sources still require policy support to bridge the gap between the cost of generation and the market price of electricity, that situation could soon be changing, according to a report from the International Energy Agency Renewable Energy Technology Deployment.
The report, which focuses on Canada, France, Germany, Japan, Norway, Sweden and Spain, notes that policies and regulations can significantly affect the business cases of renewable and nonrenewable power sources. Although government policies are currently needed to mitigate the high cost of generation for new renewable energy technologies, the report notes that the generation costs of new renewable energy technology are decreasing and approaching the costs of gas- and coal-fired plants.
At the same time, the report states, the cost of gas- and coal-fired plants is increasing because of lower utilization of thermal plants, the higher capital costs of some new thermal plants and the increasing cost of fuel. The IEA-RETD also wrote emission control may be relevant, but the impact is somewhat reduced at the present.
“The future competitiveness of thermal generation is going to be positively or negatively influenced by the shape and provisions of future policies for control of emissions,” the report states.
The IEA-RETD does state it is necessary to maintain current incentives to provide business cases that would interest investors for now, however, noting that when incentives do not exist or are not appropriately defined, “the business case of new generation does not hold.”
The full report is available at http://iea-retd.org/wp-content/uploads/2013/07/RE-COST_IEA-RETD_2013.pdf.
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