As renewable sources of energy continue to decline considerably in price, they are no longer dependent on policy support or subsidies. They are now viable, mainstream sources of electricity generation that can be compared with traditional generation sources — whether fossil fuel-based or powered by nuclear reactors. There are several misconceptions about how different sources of electricity are priced. A good number are a result of how Eskom seeks to present them. This is particularly true in relation to renewable sources supplied by Independent Power Producers (IPPs). The internationally accepted metric for comparing different generating technologies is the levelised cost of electricity. Its principal purpose is as a planning tool and it seeks to bring into account the value of all the energy produced (in kWh) by a generator. It is the life cycle cost per kWh of any future project, but it is static and only considers capital costs of competing technologies at a point in time and fa...

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