In Germany, the electricity production costs of solar systems are between € 0.041/kWh and € 0.144/kWh

Solar energy has claimed the top spot as Germany’s most cost-effective energy source, according to a report by the Fraunhofer Institute for Solar Energy Systems (Fraunhofer ISE). The report highlights that solar photovoltaic (PV) systems now offer a levelized cost of energy (LCOE) ranging from €0.041 ($0.049) to €0.144 per kWh, making it highly competitive in the renewable energy sector.

Solar vs. Wind: A Cost Comparison

When compared to wind energy, solar holds a slight advantage, with wind energy LCOE ranging from €0.043 to €0.92 per kWh. The analysis reveals that ground-mounted PV systems and onshore wind turbines are the most cost-efficient energy producers in Germany, outperforming other power sources.

Installation Costs: Solar vs. Wind

The study also examined installation costs, estimating PV system setup costs to be between €700 and €2,000 per kW, depending on system size and solar exposure. Wind turbines, by comparison, cost between €1,300 and €1,900 per kW.

The Role of Batteries in Solar Energy

PV systems with battery storage have a higher LCOE, ranging from €0.060 to €0.225 per kWh, with battery costs estimated between €400 and €1,000 per kWh. However, by 2045, the cost of utility-scale PV could drop to €0.031 to €0.050 per kWh, with rooftop systems falling to €0.049 to €0.10 per kWh.

Future Cost Projections

Looking ahead, Fraunhofer ISE predicts significant cost reductions for PV systems by 2045, with ground-mounted systems potentially costing below €460 per kW. By 2035, PV-battery combinations are expected to generate electricity more affordably than combined cycle gas turbine plants, with LCOE estimates between €0.07 and €0.19 per kWh as battery costs fall to €180 to €700 per kWh.

Investment Opportunities in Renewable Energy

Christoph Kost, Head of Energy System Analysis at Fraunhofer ISE, emphasized the investment potential of large-scale renewable energy projects in Germany, particularly ground-mounted PV, wind farms, and battery storage systems, which are key to optimizing grid capacity.