The global electric sector is poised to add thousands of gigawatts of new generating capacity in the coming decade to meet growing demand, replace aging and retiring assets, and achieve decarbonization targets. Based on cost-performance attributes, solar photovoltaic (PV) power plants and wind farms are projected to account for the majority of capacity additions, continuing the recent trends.
Project developers, independent power producers, utilities, and other electricity providers make renewable energy investment, design, engineering, and procurement decisions based on a variety of economic considerations. Minimizing up-front costs occupies one end of the spectrum and maximizing lifetime value the other, with grid reliability and resilience, environmental performance, and community acceptance representing additional dimensions.
As wind and solar become increasingly important contributors to power grids around the world, the growing experience base is providing insights on the importance of reliability and other factors that impact energy losses and, thus, life-cycle costs for individual projects. An accurate accounting of the total cost of ownership—including capital expenses (CapEx) and operations and maintenance (O&M) costs, plus the cost of various types of energy losses occurring across a project’s lifetime—is required to make informed decisions regarding the development, management, and acquisition of wind and solar assets.