Renewable energy costs drop in '09

Prices for renewable energy equipment, including wind turbines and solar panels, fell this year, but they were offset by higher financing costs in the wake of the global economic slowdown, New Energy Finance said in a quarterly research note.

"As capital markets loosen up and equipment prices continue their decline, we will see the levelized costs decline, finishing the year 10 percent below the end of last year across the board and far more than that in solar," said Michael Liebreich, London-based New Energy Finance's chairman and CEO.

Levelized costs for solar energy, or the lifetime cost per kilowatt hour before government subsidies, will drop this year, with thin-film solar power generation rates falling to as low as $3 per watt, the report said.

Chinese and European solar power companies were upbeat about next year, saying last week that demand for clean energy systems was rebounding after a dismal 2009.

Wind turbines have dropped to their lowest level in several years, shedding 18-20 percent of their cost in 2009, New Energy Finance said, adding that equipment prices could be offset by higher construction costs as developers build in deeper waters.

Geothermal energy rates also eased as low oil prices caused many drilling rigs to sit idle, meaning more equipment was available.

Geothermal uses underground hot water and steam to spin turbines and generate electricity.

New Energy Finance said drilling costs, having dropped by nearly 50 percent earlier this year, recovered somewhat alongside oil prices in the third quarter.

The U.S., Europe, China and South Korea lead global renewable energy spending plans after committing about $500 billion to push 'green' technologies under wider plans to stimulate their own economies.