The authors note that differentiating technologies or countries is one of the reforms under discussion in the Clean Development Mechanism following its experience with nearly 3,500 projects in 70-plus countries.
They commented that there is little available data on the costs of different renewable energy technologies in developing countries, and that such information is needed to allocate funding through such mechanisms as the Green Climate Fund – which is expected to raise US$100 billion per year by 2020.
The researchers, from the Swiss Federal Institute of Technology in Zurich, studied the baseline costs of current energy sources in Brazil, Egypt, India, Kenya, Nicaragua and Thailand – including the cost of national fuel subsidies – and then investigated the relative costs of switching to wind farm or solar power electricity.
These countries were chosen due to their variety in size, state of economic development and current variation in energy use.
Broadly speaking, the authors said that in 2010, PV electricity costs were 2.2 to 4.5 times higher than wind power in these countries, and that the cost gap between the two technologies could be expected to continue until at least 2020.
"The implication is that the cost of wind turbines and PV generation with that of existing and future conventional power plants must be compared for each country," lead researcher Tobias Schmidt told SciDev.Net.
However they found significant national differences in the cost of switching from conventional energy to wind power in the six countries studied.
They found that Kenya and Nicaragua would save money by switching to wind power because their baseline energy costs are high and their wind costs would be low.
A similar switch from conventional energy would be far higher in Brazil, India and Thailand, and lower in Egypt, due to different national costs relating to wind energy and the varying contribution of high-emission oil or coal plants to total electricity production.
"Fossil fuel subsidies should [therefore] be explicitly included in the calculation, as they raise the incremental cost of renewable energy technologies," Schmidt said, adding that transitioning to renewable energy sources would need to be more gradual in countries where the elimination of fuel subsidies might lead to higher fuel prices and voter anger.
"International funding must help developing countries implement a socially-acceptable phasing out of fuel subsidies and create an attractive environment for clean technology investors," he said.
Oliver Waissbein from the Energy and Environment Group of the UN Development Programme said that "this study nicely demonstrates to policymakers how to make informed decisions about renewable energy opportunities by using detailed, data-driven cost comparisons for generating electricity in individual countries".