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Assessing the costs of photovoltaic and wind power in six developing countries

Nature Climate Change volume 2, pages 548–553 (2012)Cite this article

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Abstract

To support developing countries in greenhouse-gas emission abatement the 2010 Cancún Agreement established various institutions, among others a financial mechanism administered by the Green Climate Fund. However, the instruments for delivering the support and the magnitude of different countries’ financial needs are strongly debated. Both debates are predominantly underpinned by rather aggregate and strongly varying top-down cost estimates. To complement these numbers, we provide a more fine-grained bottom-up approach, comparing the cost of the renewable-energy technologies photovoltaics and wind in six developing countries with those of conventional technologies. Our results unveil large cost variations across specific technology–country combinations and show to what extent fossil-fuel subsidies can negatively affect the competitiveness of renewable-energy technologies. Regarding the instrument debate, our results indicate that to foster transformative changes, nationally appropriate mitigation actions are often more suited than a reformed clean development mechanism. Regarding the debate on financial needs, our results highlight the need for a decision on a fair baseline calculation methodology. To this end, we propose a new methodology that incentivizes changes in the baseline through subsidy phase-out. Finally, we contribute to the debate on domestic versus international support for these measures.

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Figure 1: Overview of the generation cost and emissions of the baseline electricity generation mix.
Figure 2: Overview of the LCOE of solar photovoltaics and wind in 2010 and 2020.
Figure 3: Overview of the incremental costs of electricity generation and emission abatement.
Figure 4: The effects of fossil-fuel subsidies on the incremental costs of RET in BrazilNE and Egypt.

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Acknowledgements

We want to thank V. H. Hoffmann for providing us with the opportunity to carry out this research. We gratefully acknowledge the support by H. Pacini from KTH Stockholm and J. A. M. Patusco from the Ministério de Minas e Energia, Brazil, for support on Brazilian power-sector data. Further thanks go to G. Gross-Durant for English proofreading.

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Authors and Affiliations

  1. Department of Management, Swiss Federal Institute of Technology Zurich (ETH Zurich), Technology, and Economics, Chair of Sustainability and Technology, Kreuzplatz 5, 8032 Zurich, Switzerland

    Tobias S. Schmidt, Robin Born & Malte Schneider

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  1. Tobias S. Schmidt
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  2. Robin Born
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  3. Malte Schneider
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Contributions

M.S. and T.S.S. designed the research. T.S.S. and R.B. developed the model and carried out the data search and the analyses. T.S.S. and M.S. wrote the paper.

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Correspondence to Tobias S. Schmidt.

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The authors declare no competing financial interests.

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Schmidt, T., Born, R. & Schneider, M. Assessing the costs of photovoltaic and wind power in six developing countries. Nature Clim Change 2, 548–553 (2012). https://doi.org/10.1038/nclimate1490

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