On Tuesday 25 July, Glennmont Partners from Nuveen held a webinar on the Levelized Cost of Electricity (LCOE). The event was chaired by Glennmont CFO, Francesco Cacciabue, with speakers Xavier Daval, CEO of kiloWattsol, and Cédric Philibert, Senior Analyst at the International Energy Agency (IEA). The webinar focused on the levelized cost of electricity for solar and wind power, with Xavier Daval discussing solar power, and Cédric Philibert discussing wind power.
Francesco Cacciabue, CFO at Glennmont, began the webinar by introducing Glennmont as a global leading infrastructure manager with significant investments in wind, solar, and wind assets across Europe, the US and Asia. He highlighted that this was Glennmont’s 11th webinar and that interested parties could access previous webinars on their website and research papers by contacting [email protected].
Xavier Daval, CEO of kiloWattsol, started by framing his presentation on the story of solar power, what it brings, and what it will continue to bring. He then explained the concept of LCoE as the total cost of building and operating a power plant per unit of energy production. He emphasized the importance of understanding LCoE as projects now move from tariff-based to merchant market models, which means LCoE will have a more significant impact on the industry. He then explained how the LCoE of solar power has decreased over recent years due to new innovations and advanced technologies, and how it previously was the most expensive of the energy options, but is now the least expensive of all, and still is decreasing in price.
Xavier further explained the intricate factors influencing LCoE, identifying four key components: module and inverter costs, balance of system (BoS) hardware, installation expenses, and soft costs. He also highlighted the impact of external factors such as material prices, such as the cost of polysilicon, a critical component of solar modules, which have experienced significant fluctuations post-COVID. He re-emphasised the importance of changes like these for the industry, as business changes have a significant impact on the entire solar power sector and how it operates.
He concluded by explaining further opportunities for the solar power industry to decarbonise by recycling photovoltaic panels and the potential benefits of reclaiming valuable materials like silicon and silver. He then re-emphasised the rapid changes of the industry. How it has changed and how it continues to change, and as it continues to progress, further innovations and technological advancements will continue to further reduce the LCoE, which makes solar energy an increasingly viable option for clean and sustainable power generation.
Cédric Philibert, Senior Analyst at the International Energy Agency (IEA) framed his presentation on the rise of wind power its potential of reducing CO2 emissions. He started by explaining that though headlines say nothing has changed when it comes to decarbonising, CO2 emissions are in fact reducing, and that this year, we can see for the very first time that it will reduce in the power sector too. He highlighted that solar and wind power come first in the renewable power industry because the energy source itself is free.
He continued to frame the 2050 net zero scenario, and how to reach it. He explained that what data shows on the power industry, is that electricity needs to decarbonise by increasing its amount of primary energy, but also that we would need more electricity to replace fossil fuels in transport, buildings, and industry sectors.
Cédric then highlighted the importance of wind power in replacing fossil fuels, its importance for temperate countries in Europe, and the cost of wind. He explained the seasonal complementarity of wind and solar in different, with the wind being more prevalent in European temperate countries during winter and solar dominating in warmer countries with greater access to sunlight. He continued by saying how wind has lowered its cost thanks to Brazil and China.
Cédric concluded that cost evolution may be slower in the future and that further innovations will continue to increase the flexibility in the power industry. As there are higher size limits for the wind sector, improvements have made them more efficient and lower in cost. Wind turbines are growing slowly and have the potential to increase their capacity factor and value of produce, which will lead to higher value of the system. This will come from further advancements and innovations within the sector in years to come.
The session closed with a discussion between panellists and questions from the audience, on topics including the inflation reduction act in the US, whether prices should be adjusted based on the Chinese situation of localising production, the division of new assets and what it means for renewable energy and fossil fuels, and what the consolidation in the sector has affected the levelizing cost of electricity.