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10
Figure 4-1 New investments in renewable energy excluding large hydro, 2004-2014, $bn.
Includes estimates for undisclosed deals.
Source: UNEP, Bloomberg New Energy Finance
In the case of PV, this growth has resulted in dramatic reductions in cost of electricity (se
e figure 4-2),
which in turn has further contributed to market growth. PV costs have been reported to have fallen
with 80% since the end of 2009, with PV gaining competitiveness with fossil-fuel fired electricity costs
in some regions (IRENA 2015a).
The development of offshore wind has followed a different trajectory. Although OWP is a technology
with large potential, it is also a technology that has been confronted with difficulties. Despite increased
investments in both R&D and deployment, the cost of electricity increased in the period between 2008
and 2013. This increase in costs can largely be explained by projects being developed further off shore
in deeper waters, cost overruns due to harsh environments and complexity of construction at sea,
increased steel prices, and lack of competition in the turbine market. However, estimated costs for
recent projects such as the Horns Rev 1 project developed by Vattenfall shows that substantial cost
reductions can been made (Danish Ministry of Energy 2015). Nevertheless, we note a significant
difference between OWP and PV in that the value of the PV market and the estimated share of the
total electricity market for PV is substantially larger than the market for OWP. Moreover, whereas
OWP will depend on subsidies in order to compete with more cost-efficient technologies for some time,
PV is today competitive without subsidies in some markets (IRENA 2015b).
0
50
100
150
200
250
300
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
New investments in renewable energy last decade
Wind Solar
Other (ex. large hydro)