The growth of renewable energy over the past decade has surpassed all expectations. Globally, installed capacities and production from renewable technology have increased substantially during the last few years. The capacity additions have been supported by policy initiatives from the governments in different regions of the world. However, it is majorly the growth in the generation of solar and wind technologies that has pushed renewable power generation capacity additions to record levels. An increased deployment, technological improvements and cost reductions have made onshore wind energy one of the most competitive options for new power generation capacity.
The decline in the levelized cost of energy (LCOE) of solar power has remained the highest (between the year 2010 to 2015) amongst renewable technologies, making it comparable to the fossil fuels. Nevertheless, LCOE for wind power is not only comparable but has stood even lower than the fossil fuels as most efficient wind projects around the world are consistently delivering electricity for USD 0.05/kWh without financial support. This is further supported by the fact that the net capacity additions for wind have been higher than solar, except for the year 2013, where new solar deployment exceeded the wind for the first time.
Moreover, between 2010 and 2015, the average LCOE of utility-scale solar PV has fallen by around half, only because solar PV module prices have declined by two-thirds to three-quarters during the period. The decline in LCOE of wind power, however, slower than solar is led by technological improvements and the decline in installation costs. The wind turbine prices in developed countries have fallen by around 30% since their peak in 2008-2009, whereas, Chinese wind turbine prices fell by 35% from their peak in 2007. The most important developments in the wind market relate to technological improvements to ensure a range of wind turbine options is available to project developers. Thus, they can choose the designs that yield the lowest LCOE given the local site characteristics.
Further, even in terms of capacity factors wind power has surpassed solar as the speed of the wind increases with height. Improved blade designs, pitch and yaw control and more advanced towers can help unlock even higher capacity factors, which in the case of solar is primarily dependant on the quality of sunlight, further supporting the fact that wind energy is more cost effective than solar. Furthermore, a combination of lower total installed and O&M costs as well as rising capacity factors mean the LCOE of onshore wind could fall by 26% by 2025.
In the year 2040, the contribution of the wind and solar power is projected to account for about 7% and 2%, respectively, of the global power supply. But the future may hold more surprises as technological innovations are possible and numerous R&D projects presently under way can radically change the economics of renewable power.