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Renewable Energy

Energy and Climate Change written question – answered on 20th June 2012.

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Photo of Chris Heaton-Harris Chris Heaton-Harris Conservative, Daventry

To ask the Secretary of State for Energy and Climate Change what estimate his Department has made of the likely cost of producing a unit of each form of renewable energy in (a) 2012, (b) 2015 and (b) 2020.

Photo of Charles Hendry Charles Hendry The Minister of State, Department of Energy and Climate Change

DECC has published information related to capital costs and installation costs of various renewable electricity generation technologies—a report by Arup for DECC on the generation costs and deployment potential of renewable technologies in the UK:

http://www.decc.gov.uk/assets/decc/11/consultation/ro-banding/3237-cons-ro-banding-arup-report.pdf and the renewables obligation (RO) banding review consultation document, which can be downloaded from our website at

http://www.decc.gov.uk/en/content/cms/consultations/cons_ro_review/cons_ro_review.aspx

DECC has updated estimates for the underlying costs of solar PV as part of the Government response to Phase 2A comprehensive review of feed in tariffs, which can be found at:

http://www.decc.gov.uk/assets/decc/11/meeting-energy-demand/renewable-energy/5381-solar-pv-cost-update.pdf

The following table replicates information that can be found in the above reports(1), and shows central estimates for selected technologies for projects starting in 2011(2) and 2017 using a 10% discount rate.

Further estimates for other technologies can be found in the cited reports.

(1) Please note that while the update of solar PV report did not include levelised cost calculations, the underlying published data has been used to calculated a solar PV levelised cost presented in the above table.

(2) Please note “project start” indicates the start of pre-development work (including consent) for the project prior to final investment decision and commissioning.

Table 1: Central levelised cost estimates for selected electricity generation technologies
  Projects starting in 2011, £/MWh Projects starting in 2017, £/MWh
Onshore Wind 5 MW > 90 88
Offshore R2 Wind 123 106
Dedicated Biomass >50MW 145 143
Solar PV<4kW (1)318 242
Solar PV250-5000kW (1)166 128
(1) The Solar PV figure is for projects starting in 2012 Note: Please note all data is in £2010 prices. Source: Arup/EY (2011), PB (2012).

It should be noted that the estimates of levelised costs for different types of electricity generation are highly sensitive to the assumptions used for capital costs, fuel and EU emissions trading scheme allowance prices, operating costs, load factor, discount rate and other drivers and this means that there is significant uncertainty around these estimates. It is perhaps more appropriate to consider a range of cost estimates as pipeline projects show a large range around these central values (set out in more detail in the above reports).

Updated levelised costs for renewable electricity will be published in the Government response to the RO banding review consultation.

The cost of renewable heat is sensitive to many variables. The load factor, building type, size, geology and counterfactual fuel type all impact on the cost. A full account of DECC’s data can be found in the NERA/AEA report at this link:

http://www.decc.gov.uk/assets/decc/consultations/rhi/1_20100129161148_e_@@_designoftherenewableheat incentivenerareport.pdf

The table in Annex A outlines the levelised cost per MWh of heat for technologies expected to be installed under Phase I of the renewable heat incentive (RHI). The total resource cost is the additional price paid by society for each unit of renewable heat. DECC is currently updating cost estimates for renewable heat, which are expected to be published in autumn.

Central estimates of the £/MWh production costs for 1st generation crop-derived biofuels are given in the following table. These cost estimates are subject to considerable uncertainty, most notably assumptions around future agricultural commodity prices.

£/MWh central estimates of biofuel production costs, 2010 prices
  bioethanol biodiesel
2012 75 79
2015 71 77
2020 65 74

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