Assessing the costs of photovoltaic and wind power in six developing countries

To support developing countries in greenhouse-gas emission abatement the 2010 Cancún Agreement established various institutions, among others a financial mechanism administered by the Green Climate Fund. However, the instruments for delivering the support and the magnitude of different countries’ financial needs are strongly debated. Both debates are predominantly underpinned by rather aggregate and strongly varying top-down cost estimates. To complement these numbers, we provide a more fine-grained bottom-up approach, comparing the cost of the renewable-energy technologies photovoltaics and wind in six developing countries with those of conventional technologies. Our results unveil large cost variations across specific technology–country combinations and show to what extent fossil-fuel subsidies can negatively affect the competitiveness of renewable-energy technologies. Regarding the instrument debate, our results indicate that to foster transformative changes, nationally appropriate mitigation actions are often more suited than a reformed clean development mechanism. Regarding the debate on financial needs, our results highlight the need for a decision on a fair baseline calculation methodology. To this end, we propose a new methodology that incentivizes changes in the baseline through subsidy phase-out. Finally, we contribute to the debate on domestic versus international support for these measures.