Renewables gain ground as costs fall
Add Axios as your preferred source to
see more of our stories on Google.
The financial advisory firm Lazard is out with its latest analysis of costs for competing energy technologies, and it says a lot about where the U.S. and global power sectors are heading.
Driving the news: The annual analysis shows continued cost declines for wind and solar, albeit not as dramatic anymore, as the chart above shows.
Why it matters: It underscores how these growing sources, already attractive compared to building new fossil-fueled generation, are increasingly competitive against even existing coal and gas-fired plants.
The big picture: The International Energy Agency's long-term outlook notes that "solar projects now offer some of the lowest cost electricity ever seen."
- More broadly, its most conservative model — which uses only nations' existing and announced policies — sees renewables meeting 80% of global power demand growth over the next decade.
Where it stands: One part of Lazard's analysis looks specifically at how wind and solar fare against existing plants in the U.S. when you include current federal tax credits.
- With those credits, "the cost of onshore wind and utility-scale solar is competitive with the marginal cost of coal, nuclear and combined cycle gas generation," a summary notes.
- It's not even close when you compare coal and renewables.
- The "values average $31/MWh for utility-scale solar and $26/MWh for utility-scale wind, while the latter values average $41/MWh for coal, $29/MWh for nuclear, and $28/MWh for combined cycle gas generation," Lazard notes.
How it works: The annual report looks at the "levelized" costs of power sources — that is, an inclusive cost comparison of building, running, supplying and maintaining different types of facilities over time.
- However, it doesn't cover some considerations, like new transmission needed and grid integration costs.
- Renewables' intermittency also means more storage is needed as deployment grows.
- Lithium-ion batteries dominate the short-duration market, while a number of technologies are competing for a foothold in the younger long-term market, Lazard notes.
