Cost data to maximize the use of renewable energy

Recent developments in the field of energy generation and distribution, as well as political trends, have had a noticeable impact on the energy generation market. The focal point for investments is steadily shifting towards the installation of renewable energy generation, despite private investors being cautious about taking the step. This development implies that a significant portion of new projects searches to exploit relatively new technologies.

New technology in renewables

Aside from the fact that electricity infrastructure is prone to cost overrun issues almost independently of technology or location , the use of relatively new technologies means that many technology related variables that affect cost have not settled yet. Take for instance the continuing drop in global PV-panel prices, particularly steep during 2011 and 2012. This specific trend had a positive effect on project outcomes that apparently had little overruns and in some cases even underruns. 

However, what actually happened here is that solar project cost overruns were hidden and offset by declines in solar panel prices. Moreover, despite the positive project outcomes in terms of cost, delays were not avoided. In general, this presents an important challenge for future projects as they will not be able to achieve the same kind of results without a significant increase in performance. 

Historical cost data of renewable energy projects

To systematically and consistently prevent cost overruns in renewable energy projects, an accurate cost estimate is crucial. And the historical cost data plays an important role in creating accurate estimates. Historical cost data can be gathered from the renewable energy projects that have already been executed. The data can contain information on more than purely costs, for instance on main reasons for delays and on the critical activities. The data can also be region specific and include factors such as local productivity, weather patterns or economic trends that are predictable to a certain point and that may cause overruns.

Thanks to the historical cost data that is gathered and used, the reasons for possible overruns in renewable energy projects could be identified on time and they can be managed. This means that risks can be accounted for and the lessened uncertainty would result in a more attractive image for private investments. As a result, an increased amount of approved renewable energy projects could contribute to the energy transition.

*Dr. Benjamin K. Sovacool, An international comparative assessment of construction cost overruns for electricity infrastructure, 2014  

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