The cost of generating electricity from renewable energies is now lower than that of traditional energy sources such as coal and gas. This trend is expected to continue in the coming years. You can find out everything about the cost of generating electricity in Germany here.
What are electricity generation costs?
The electricity generation costs are all costs that arise when energy is converted into electricity. They vary depending on the energy source. Thus, electricity generation costs provide a way of comparing different energy sources. They are usually given in cents/kWh or euros/MWh.
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How are electricity generation costs calculated?
To calculate the electricity generation costs, all costs of a power generation plant are added together and divided by the expected electricity yield. This is a very simplified formula. The costs include investment, installation, operating, personnel, fuel and disposal costs. Since the introduction of the European emissions trading system, the emission costs for CO₂ emissions have also been taken into account.
What are the electricity production costs of different energy sources?
According to Fraunhofer ISE, the electricity generation costs for the respective energy sources are between 3 and 29 cents per kWh. The costs are highest for gas. The electricity generation costs for photovoltaics have fallen significantly in recent years due to falling prices.
Comparison of electricity generation costs in Germany (data source: Fraunhofer ISE)
photovoltaics
The electricity generation costs for photovoltaics are between 3.12 and 11.01 cents/kWh. Depending on the size of the system, the specific system costs are between €530 and €1600 per installed kWp. The larger a PV system is, the lower the electricity generation costs are.
This is the reason why the costs in the upper graph of “PV free” are significantly lower than “PV roof large” and “PV roof small”.
If you add a storage unit to the PV system, the costs increase significantly. The electricity generation costs are then between 5.24 and 19.72 cents/kWh. The high price is due to the cost differences between the battery systems.
The electricity generation costs for photovoltaics have fallen significantly over the last few years.
| Year | electricity generation costs PV |
| 2010 | 35 cents/kWh |
| 2012 | 15 - 20 cents/kWh |
| 2013 | 8 - 14 cents/kWh |
| 2018 | 3.71 - 11.54 cents/kWh |
| 2021 | 3.12 - 11.01 cents/kWh |
Which factors influence the levelized cost of electricity?
The greatest increase in electricity production costs is due to the acquisition costs Other factors include:
- installation
- Operation
- staff
- production or extraction
- disposal
- CO₂ emissions
wind
When it comes to the levelized cost of electricity for wind power, a distinction must be made between onshore and offshore wind turbines. The levelized cost of electricity is slightly higher for offshore turbines due to the higher installation, operating and financing costs.
- Onshore wind turbines: 3.94 to 8.29 cents/kWh
- Offshore wind turbines: 7.23 to 12.13 cents/kWh.
The levelized cost of electricity for wind power has been stable in recent years.
| Year | electricity generation costs from wind power |
| 2010 | 5.4 - 11.9 cents/kWh |
| 2012 | 6.5 - 11.5 cents/kWh |
| 2013 | 4.5 - 10.7 cents/kWh |
| 2018 | 3.99 - 13.79 cents/kWh |
| 2021 | 3.94 - 12.13 cents/kWh |
gas
The electricity generation costs for gas turbine power plants are between 11.46 and 28.96 cents/kWh. This makes gas one of the most expensive energy sources. The reason is the rising price of gas and the CO₂ emission costs.
hard coal and lignite
The levelized cost of electricity from hard coal and lignite has increased due to higher prices for CO₂ certificates.
- The electricity generation costs of lignite-fired power plants are between 10.38 and 15.34 cents/kWh;
- The electricity generation costs of hard coal-fired power plants range between 11.03 and 20.04 cents/kWh.
nuclear power
Due to the nuclear phase-out, no electricity generation costs for nuclear power in Germany are known. The Federal Ministry of Energy and Economics estimates the electricity generation costs of nuclear energy at around 13 cents per kilowatt hour. However, this calculation does not include some ongoing costs. If these were included, the true costs of nuclear energy would probably be considerably higher.
How will the levelized cost of electricity develop in the future?
Renewable energies such as wind and photovoltaics are becoming cheaper, while the levelized cost of electricity for coal and gas is increasing. This trend will continue until 2040, as the prices of solar modules and wind turbines are steadily falling. Conventional power plants are producing less electricity due to the expansion of renewable energies, which is causing the electricity costs for coal and gas to rise.
