All grown up: Falling costs for developing wind and solar power plants are giving those technologies a market edge over coal and nuclear power even without tax subsidies, according to a new analysis on the changing economics of electricity from the financial advisory firm Lazard.
Why it matters: The trend explains why power companies are opting to build new renewables generation, like American Electric Power's massive Wind Catcher project in Oklahoma, according to Jonathan Mir, head of Lazard's North American Power Group.
The study also signals why new utility-scale renewables plants will continue to be developed even after federal tax credits expire in a few years, he said in an interview.
Key trend: Mir notes that costs have come down enough that developing new renewables generation is increasingly attractive in many regions compared to even keeping existing coal and nuclear plants running.
- "In North America the costs of utility-scale solar and utility-scale wind on an unsubsidized basis are starting to approach the marginal cost of operating nuclear or coal plants," he tells Axios.
- "Currently, given U.S. tax subsidies, they are beneath the marginal costs of coal and nuclear. That is why you are seeing an acceleration of coal and nuclear retirements."
The report examines the so-called levelized costs of different technologies, which basically means an all-in comparison of the costs of building, running, supplying and maintaining different types of facilities over time.
It finds that the costs for utility scale solar technologies fell by another 9% from last year, while wind dropped 4%, a summary states.
Go deeper: Lazard analysts caution that while renewables are increasingly attractive, the grid will require a mix of generation sources. And there are a suite of variables when comparing costs, some of which — like integration and transmission — aren't factored into the analysis.
You can read the detailed report here, and a separate analysis of energy storage cost trends here.