Rapid Cost Dynamics of Clean Energy Technologies

Accelerated climate protection is a declared goal of the Glasgow Climate Pact that was agreed upon last weekend. A new study of economists from the University of Mannheim now reveals that the costs for clean energy sources and energy storage, such as solar photovoltaic modules, batteries, or renewable hydrogen have decreased a lot faster than expected.

The costs for clean energy sources are a major factor for the success of the energy transition. Recently, the US government announced that it wants to cut the costs for solar energy in half until 2030. At the same time, the costs for clean, renewable hydrogen should decrease by 80 percent so that hydrogen can compete with natural gas.

But can these goals be reached in this short period of time? The research team of the Mannheim Institute for Sustainable Energy Studies (MISES) aimed at answering this question in a new study. The result: Continuous improvements of the currently available technologies should suffice to reach the targeted cost reductions. On the other hand, new technology breakthroughs are not necessary to reach this goal. The reason for this positive outlook is that the costs for wind and solar energy as well as for producing green hydrogen have decreased more than expected during the last century.

“The energy transition is an enormous task. But we can reach many of our goals with the existing technologies – under the condition that we move quickly to expand these technologies widely,” says Rebecca Meier, co-author of the study.

She analyzed together with Prof. Stefan Reichelstein, Ph.D. and Prof. Gunther Glenk how the purchase prices of solar photovoltaic modules, wind turbines, batteries, and electrolyzers developed. On this basis, the researchers examined how the costs for producing clean electricity from sun and solar energy developed and with which rate the production costs for renewable hydrogen decreased.

Link to the publication in the Schmalenbach Journal of Business Research: http://tiny.uni-mannheim.de/6me

To the press release (in German)