Page - 13 - in Clean Water Using Solar and Wind - Outside the Power Grid

Water and energy – for all 13 evaluate and compare costs for both conventional and renewable sources of energy, otherwise this could easily become an exercise in comparing apples and oranges. An economic instrument is the levelised cost of energy (LCOE), which is defined as a way to express the lifetime costs divided by energy production and can be expressed in cost/kWh. The LCOE shows both capital costs in form of annual amortisations and variable costs. The LCOE is a step forward in the definition of a metric for the real costs of energy, though it also has its limits. The LCOE depends on the selected amortisation period and the reference interest rate. This is further examined in Chapter 12.1. In addition, the LCOE doesn’t say anything about the demand for power. A solar kWh in bright sun during summer has a different value from the same kWh in a cold region in winter, the same as a litre of fresh water has a different value in a hot desert from on the shore of a Nordic lake. It represents, however, a step forward in the comparison of quantities that by their nature are difficult to relate to each other. A key observation from Lazard’s latest levelised cost of energy (LCOE) analysis (Lazard, 2017) published in November 2017 is: “as LCOE values for alternative energy technologies continue to decline, in some scenarios the full-lifecycle costs of building and operating renewables-based projects have dropped below the operating costs alone of conventional generation technologies such as coal or nuclear. This is expected to lead to ongoing and significant deployment of alternative energy capacity.” The report further notes that the global costs of renewable energy generation continue to decline. The LCOE for both large-scale solar PV and onshore wind technologies declined around 6% in 2017. It is also observed that the gap between the costs of alternative energy technologies like large-scale solar PV and onshore wind energy compared to conventional generation technologies continues to widen. For example, the cost development for coal generation remains The energy field has undergone a massive change in less than a decade. Solar PV and wind are now the electric energy sources with the lowest cost. Downloaded from https://iwaponline.com/ebooks/book-pdf/520710/wio9781780409443.pdf by IWA Publishing user