Solar and wind are now cheapest power source for most of the world
Illustration: Sarah Grillo/Axios
The downward march of solar and onshore wind power costs mean they're now the cheapest source of new power development for at least two-thirds of the global population, the research firm BloombergNEF said in a new analysis.
Why it matters: The annual survey of all-in costs for power projects underscores why analysts see the coronavirus pandemic slowing growth but not altering the fundamental trajectory of the technologies.
What they found: The levelized cost of electricity for utility-scale solar and onshore wind projects has fallen another 4% and 9% since just the second-half of 2019.
- Wind has seen the steepest decline since 2015, they note. "This is mainly due to a scale-up in turbine size, now averaging 4.1 megawatts, and priced at about $0.7 million per megawatt for recently financed projects," they said.
What they did: The analysis measures the all-in costs of creating power, which means "development, construction and equipment, financing, feedstock, operation and maintenance."
But, but, but: The growing cost-competitiveness and often outright advantage that is driving growth in the sectors doesn't mean there aren't big problems due to coronavirus.
- Multiple analysts have cut their forecasts for 2020 additions of new generating capacity.
- The pandemic is disrupting supply chains and some project financing, and developers fear missing out on deadlines to use incentives.
- The Financial Times reports today that in the wind sector, supply chain woes are "putting as much as 30 gigawatts of new capacity at risk in the US, China and Europe this year alone."
The intrigue: BloombergNEF notes that competing fuels are also seeing cost declines.
- "Coal and gas prices have weakened on world markets. If sustained, this could help shield fossil fuel generation for a while from the cost onslaught from renewables," chief economist Seb Henbest said.
What we're watching: Whether calls from the UN, International Energy Agency, EU officials and others for boosting clean energy via economic rescue packages come to fruition.