Estimating the cost of capital for solar PV projects using auction results

The cost of capital (CoC) is an important parameter for accurately calculating power generation cost, particularly for capital-intensive renewables such as solar PV. However, data on CoC is sparse, which is an issue given large differences in CoC between countries and over time. The global trend towards competitive auctions for renewable energy deployment provides an opportunity to fill this gap. Here, we demonstrate how to combine auction price and project-level cost data to estimate the CoC for solar PV over time in nine countries, analysing 3 ' 983 individual projects. Based on our results, we conclude that the CoC has fallen considerably across countries in all five continents analysed. These decreases were largely due to a reduction in premiums that investors demand for solar PV projects. We also find a strong decline in the variance of the data across time, pointing to better data quality and/or more homogenous project conditions. This trend is encouraging for future analyses, including potential CoC forecasting. However, given data quality issues and the amount of manual work required to address these, the approach should not be used as a standalone to estimate the CoC across countries.