PV and battery cheaper than fossil fuels

The study by the Fraunhofer Institute for Solar Energy Systems ISE compares the electricity generation costs of various technologies. The results show that PV systems in Germany are superior to fossil fuel power plants in terms of costs if they are coupled to a battery storage system. The researchers look at the levelized cost of electricity (LCOE) in detail. These describe the average generation costs per kilowatt-hour of electricity over the entire lifetime of a power plant.
According to the study, ground-mounted photovoltaic systems and onshore wind energy are the most cost-effective technologies on the German market, with electricity generation costs between 4.1 and 9.2 cents/kWh. Even for PV battery systems, which are often considered more costly, LCOE is only 6.0 to 22.5 cents/kWh, depending on location and system size. The researchers attribute this range, on the one hand, to the different costs for battery systems. They estimate these to be between 400 and 1,000 euros/kWh of storage capacity. On the other hand, regional differences in solar radiation also play a role.
Dr. Christoph Kost, lead author of the study and head of energy system analysis at Fraunhofer ISE, explains: “These results underscore that large-scale projects that combine ground-mounted PV systems, wind farms and stationary battery storage are not only ecologically but also economically sensible investments.” Such hybrid power plants would allow grid capacities to be used optimally and energy costs to be further reduced.

Long-term cost reduction by 2045
The study also examines the development of costs up to 2045. Its forecast: by then, the electricity generation costs for small PV roof systems will be between 4.9 and 10.4 cents/kWh, while large PV open-field systems will be able to supply electricity for 3.1 to 5.0 cents/kWh
.According to the study, small battery-storage systems could achieve electricity production costs of 7 to 19 cents/kWh by 2045 if the prices for battery storage fall as predicted to 180 to 700 euros/kWh.
The researchers also expect significant cost reductions in wind energy, especially onshore, by 2045. New onshore wind turbines could then generate electricity at costs between 3.7 and 7.9 cents/kWh. Offshore wind farms will also benefit from higher full-load hours and larger turbines, which should further reduce their LCOE.

Flexible power plants remain necessary
Despite the falling LCOE for renewable energies, the scientists still consider flexibly adjustable power plants to be indispensable for ensuring security of supply in a system with a high proportion of green energy. Biomass and biogas plants are still needed as flexible technologies. However, their electricity production costs are significantly higher. For biogas plants, the LCOE in flexible operation is between 20.2 and 32.5 cents/kWh of electricity, according to Fraunhofer. For solid biomass, the costs are somewhat lower, with values between 11.5 and 23.5 cents/kWh.

The LCOE and full-load hours of hydrogen-CCGT
Hydrogen-powered combined cycle gas turbine (CCGT) power plants, which are expected to be built more frequently from 2030 onwards, also have higher electricity production costs, according to the study. In highly flexible operation, Fraunhofer ISE estimates these at 23.6 to 43.3 cents/kWh. 
The reason: these technologies are significantly more expensive than renewable energies due to the high costs of hydrogen in procurement and operation. Dr. Paul Müller, co-author of the study, expects that the operation of these power plants will be limited to about 1,000 to 2,000 hours per year, since they will mainly serve as a back-up for peak load times.