European Commission Studies Renewable Costs

New analysis commissioned by the European Commission concludes that renewables such as onshore wind and solar PV are close to that of conventional technologies like coal, gas and nuclear in terms of costs and subsidy levels.

Furthermore, by including external factors, which are currently not reflected in market prices, such as climate and health costs, renewables are comparable if not even cheaper than energy sources such as coal.

Interim findings from the Ecofys study commissioned by the EC deliver the first full dataset on costs per megawatt-hour (MWh) as well as subsidies for all forms of electricity generation. According to this analysis the total value of public interventions in energy, aside from transport fuels, was between €120-140 billion in 2012 for the 28 countries of the European Union.

“Unsurprisingly, given the efforts to expand the share of renewable energy in the EU’s overall energy consumption, the largest amounts of current public support in 2012 went to renewables,” said the Commission, noting that in 2012 subsidies for solar power were €14.7 billion, onshore wind €10.1 billion, biomass €8.3 billion and hydropower at €5.2 billion.

Conventional power generation technologies received subsidies of a similar order though, with €10.1 billion for coal, nuclear at €7 billion and natural gas at € 5.2 billion.

Furthermore, the Commission notes, these subsidy figures do not reflect the free allocation of emission certificates nor tax support for energy consumption.  Including these elements would inevitably narrow the subsidy gap still further.

Presenting figures on levelized costs per MWh, electricity from coal is around €75, onshore wind is marginally higher while nuclear and natural gas are around €100. Solar power costs have fallen to about €100-€115 depending on the size of the specific installation.

In addition, the commission estimates the impact of external costs at between €150 and €310 billion, a figure which if included, say renewable energy trade groups, would put such technologies economically more beneficial than conventional fuels.

European Wind Energy Association (EWEA) analysis of the data in the report puts onshore wind at around €105/MWh and offshore wind at €186, compared with gas at up to €164, nuclear at €133 and coal at €162-€233.

Commenting on the figures Justin Wilkes, EWEA deputy CEO, said: “This report highlights the true cost of Europe’s dependence on fossil fuels. Renewables are regularly denigrated for being too expensive and a drain on the taxpayer. Not only does the Commission’s report show the alarming cost of coal but it also presents onshore wind as both cheaper and more environmentally-friendly.”

He added: “We are heavily subsidizing the dirtiest form of electricity generation while proponents use coal’s supposed affordability as a justification for its continued use. The irony is that coal is the most expensive form of energy in the European Union.”

The European Photovoltaic Industry Association (EPIA) noted that the Ecofys study “proves that solar energy is cost effective today, and is improving competitiveness at a rate that conventional technologies will never be able to achieve.”

“Despite decades of heavy subsidies, mature coal and nuclear energy technologies still rely on similar levels of public support as innovative solar energy is getting today. However, support to solar electricity is already coming down, in line with the rapid technology cost reduction, as opposed to coal and nuclear energy, which remain locked into subsidies as they have been for the last 40 years. With its increasing cost-effectiveness, solar is set to overtake conventional technologies in the short term,” said Frauke Thies, EPIA Policy Director.

Lead image: Energy Costs via Shutterstock

See Also: Financing Europe’s Climate Goals by David Appleyard.

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