The levelised cost of electricity (LCOE) – the price at which the generated electricity should be sold for projects to break even – for onshore wind would be negatively affected this year by rising raw material costs and higher interest rates affecting borrowing, it added in a report.
However, the LCOE for all solar technologies should drop as falling module prices were expected to offset the rise in the cost of capital, said Alessandro Marangoni, CEO of consultancy Althesys, during a presentation of the report.
The greatest fall of 8-12% would concern rooftop systems, while utility-scale units would see a 3-6% decrease in costs, followed by a 2% drop for agrivoltaic plants – developments on farmland.
In 2022, meanwhile, the LCOE for renewables increased significantly across Europe, making green capacity auctions unattractive, said Marangoni.
“This overall increase in costs has led to a very large, unsubscribed capacity in the latest auctions, despite the many projects and [renewables] plant proposals.”
For European onshore wind, the average LCOE in 2022 jumped 40% year on year to EUR 67.8/MWh due to increases in the cost of capital and technology, said Marangoni.
About 19 GW of new onshore capacity was installed last year in Europe, a 4% increase year on year, said the report.
New solar capacity across the continent in 2022, meanwhile, jumped 47% on the year to 41 GW, despite the LCOE for commercial plants soaring 34%.
For offshore wind, the LCOE grew 23% on the year to EUR 78.60/MWh, with the highest costs found in the Mediterranean and the lowest in the North Sea.
Only 2.5 GW of new offshore wind capacity was added in 2022, with about half of it built in the UK, said Althesys.