Solar & Storage Energy Generation Cheaper Than Conventional Sources, Claims Study

A new study by Germany’s Fraunhofer Institute for Solar Energy Systems ISE claims that solar PV systems, even in combination of battery energy storage systems (BESS), now generate electricity more cheaply than coal or gas power plants. It covers electricity generation costs for agrivoltaics, hydropower and nuclear power plants as well.  

The electricity generation cost for PV battery systems varied between €6.0 cents/kWh and €22.5 cents/kWh in its analysis. Analysts attribute this wide range mainly to 3 reasons, namely high cost differences for battery systems that range within €400/kWh to €1,000/kWh; cost differences for PV systems; and different levels of solar radiation at the plant location.  

Overall, they find ground-mounted, open-space PV systems and onshore wind turbines as the most cost-effective technologies in Germany whose generation costs vary between €4.1 cents/kWh to €9.2 cents/kWh, among all types of power plants, including other renewable energies.  

“These calculations show that the large-scale projects currently underway in Germany with a combination of open-space PV systems, wind farms and stationary battery storage systems are good investments,” said the Head of the Energy System Analysis Department at Fraunhofer ISE and lead author of the study, Dr. Christoph Kost. “The combination allows grid capacities to be better utilized, for example.” 

The cost difference goes even lower in Fraunhofer ISE’s analysis of the cost developments for the construction and operation of all power plant technologies, up to 2045.  

According to Kost’s team, in 2045 the electricity generation costs for small PV roof systems will be between €4.9 cents/kWh and €10.4 cents/kWh. For open-space PV systems, it should range within €3.1 cents/kWh and €5.0 cents/kWh.  

Assuming prices for battery storage fall to €180/kWh to €700/kWh, even small PV battery systems can achieve electricity generation costs of between €7.0 cents/kWh and €19.00 cents/kWh, added co-author of the study and a Scientist at Fraunhofer ISE, Dr. Verena Fluri.  

As for onshore wind farms, newly built turbines have the potential to produce electricity at a cost of between €3.7 cents/kWh and €7.9 cents/kWh, thanks mainly to higher full-load hours and larger turbines.  

Authors also believe in a climate-neutral energy systems with a high renewable energy share, even with battery storage, flexible controllable power plants are required as a backup. This support, they believe, can come from biogas and biomass power plants with power generation cost of €20.2 cents/kWh to 32.5 cents/kWh, and between €11.5 cents/kWh to €23.5 cents/kWh respectively.  

Fraunhofer ISE believes for hydrogen-powered gas and steam turbine power plants built in 2030, the power generation costs are likely to remain elevated in comparison, to between €23.6 cents/kWh to €43.3 cents/kWh, in highly flexible operation. Their use will be important, but operation limited to bare minimum, said another Fraunhofer ISE Scientist Paul Müller.