Large solar parks are extremely cheap to build in Czechia, study says. Costs continue to fall

2023 marked a historic milestone in the transition to an energy system based on renewable energy sources. Newly installed capacity reached a record 473 GW, representing a 54% increase compared with 2022. It was also the largest annual increase since 2000. The cost of generating a unit of electricity from renewable sources continued to fall, most notably for photovoltaic power plants, where it declined by 12% year on year. According to IRENA, the Czech Republic and Bulgaria are the countries where large solar power plants can be built most cheaply.  

Renewables once again dominated the global energy sector. According to a detailed report by IRENA, installed renewable capacity is already approaching the 4 TW mark after 2023. Total installed renewable capacity rose from 3,391 GW in 2022 to 3,865 GW in 2023, representing a year-on-year increase of 14%.

This growth is primarily the result of the continued decline in the cost of building renewable energy projects, which are becoming increasingly competitive with their non-renewable counterparts. According to the IRENA report, as much as 81% of renewable capacity installed in 2023 generates electricity more cheaply than conventional fossil fuel-based sources.

This cost reduction was made possible primarily by technological innovation and more efficient manufacturing processes. However, the generally growing demand for renewable electricity, often driven by international corporations' ESG commitments, should not be overlooked either.

Although this is positive news for the development of renewable energy sources, IRENA warns that the pace of renewable deployment must accelerate further to meet climate targets by 2030. This requires not only an increase in installed power generation capacity, but also substantial investment in infrastructure such as transmission grids and energy storage capacity.

Costs of generating electricity from renewable sources continue to fall, most sharply for solar

The average levelised cost of electricity (LCOE) from newly installed solar photovoltaic power plants fell by 12% to an average of 0.044 USD/kWh. This decline is the result of technological innovations that enable higher generation efficiency and lower investment costs. Electricity from solar power plants is therefore becoming an increasingly accessible and attractive option for power generation.

Similarly, onshore wind power plants recorded a 3% decline in LCOE, with average costs reaching 0.033 USD/kWh. This reduction resulted from improved wind turbine efficiency and their installation at sites with optimal conditions. Technological development is also enabling the installation of larger turbines capable of harnessing more energy from the wind.

Cost reductions were also recorded for offshore wind and hydropower plants, which reduced their costs by 7%. This trend points to continued technological progress across all key renewable energy sources, increasing their competitiveness in the global market.

Czech Republic has the second-lowest costs for building large solar parks

Although IRENA's report focuses primarily on the increase in installed renewable capacity worldwide, it also comments on the Czech Republic. According to the data compiled, the construction of large solar power plants was the second cheapest among the countries compared.

IRENA estimated the cost of building 1 kW of installed capacity in the Czech Republic at 663 USD. Only Bulgaria reported slightly lower costs.

Although conditions for building large solar parks in Czechia may appear ideal, not everything may be so rosy. Industry organisations have increasingly warned recently that at current electricity prices, it is difficult to achieve a return on investment. Due to the lack of operating support, investors also often face difficulties obtaining bank financing.