The costs of electricity from renewable sources and fossil fuel sources

Turning point: solar power now cheaper than wind energy

(Renew Economy: Fereidoon Sioshansi: 23 January 2017)

It was bound to happen, and apparently it has: utility-scale solar-generated power, certainly in sunny parts of the world, appears to be cheaper than wind and both are cheaper than fossil-fuel generated power – read the fine print for details of when, where and under what conditions this applies. …

Economics to Keep Wind and Solar Energy Thriving With Trump

(Bloomberg: Joe Ryan, Chris Martin, Jim Polson: 23 Nov 2016)

On the plains of West Texas, new wind farms can be built for just $22 a megawatt-hour. In the Arizona and Nevada deserts, solar projects are less than $40 a megawatt-hour. Compare those figures with the U.S. average lifetime cost of $52 for natural gas plants and about $65 for coal. Environmental rules and government subsidies are no longer the key drivers for clean power. Economics are. …..

Hazelwood owners facing unprecedented $743 million rehab bill

(The Age: 20 Jan 2016: Josh Gordon)

The owners of the soon-to-be closed Hazelwood [coal fired] power station have conceded the bill to rehabilitate the mine and demolish the ageing plant will run to almost three-quarters of a billion dollars. …  the revelations about the rehabilitation costs would have profound implications for coal power stations and mines across the country. It dispels once and for all the idea that coal is a cheap source of energy.  It is very likely that other mines and power stations are grossly underestimating their clean-up costs. Governments should hold bonds to protect taxpayers from being forced to foot the bill.


The shift to ‘base-cost’ renewables: 10 predictions for 2017

(Bloomberg New Energy Finance: Liebreich and McCrone: 18 January 2017)

The good news is that renewable energy has – at least on a levelized cost of electricity basis – clearly achieved the long-awaited goal of grid competitiveness. More than that, in many countries it now undercuts every other source of new generating capacity, sometimes by very considerable margins. Last year saw unsubsidized price records of $30 per megawatt-hour for a wind farm in Morocco and $29.10 for a solar plant in Chile. These must be the lowest electricity prices, for any new project, of any technology, anywhere in the world, ever. And we are still going to see further falls in equipment prices.

Super-low-cost renewable power – what we are now calling “base-cost renewables” – is going to force a revolution in the way power grids are designed, and the way they are regulated. ……


In Australia, Wind Power Is Already Cheaper Than Fossil Fuels, And Solar Is Right Behind

(Think Progress: Jeff Spross: 10 Feb 2013)

According to [2013 research] from Bloomberg New Energy Finance electricity from wind power can now be supplied more cheaply in Australia than power from either coal or natural gas — and solar and other forms of renewable energy aren’t far behind.

Older coal-fired power plants from the 70s and 80s still compete at lower prices than renewables — but only because their construction costs have depreciated. For the deployment of any new power generation in Australia, renewables now appear to be the way to go.

Australia currently [in 2013] charges polluters $23 in Australian dollars per metric ton of carbon they emit, but the [2013 BNEF] study concluded that wind power would still undercut fossil fuels even without that correction of the market’s failure to properly build in the costs of carbon pollution:

The study shows that electricity can be supplied from a new wind farm at a cost of [$80 per megawatt hour in Australian dollars], compared to [$143 per megawatt hour] from a new coal plant or [$116 per megawatt hour] from a new baseload gas plant, including the cost of emissions under the Gillard government’s carbon pricing scheme. However even without a carbon price (the most efficient way to reduce economy-wide emissions) wind energy is 14% cheaper than new coal and 18% cheaper than new gas.…

Bloomberg New Energy Finance’s research on Australia shows that since 2011, the cost of wind generation has fallen by 10% and the cost of solar photovoltaics by 29%. In contrast, the cost of energy from new fossil-fuelled plants is high and rising. New coal is made expensive by high financing costs. The study surveyed Australia’s four largest banks and found that lenders are unlikely to finance new coal without a substantial risk premium due to the reputational damage of emissions-intensive investments – if they are to finance coal at all.

Here’s a graphic of BNEF’s 2013 findings, courtesy of Renew Economy: (see  In Australia, Wind Power Is Already Cheaper Than Fossil Fuels, And Solar Is Right Behind.)

So the study expects both coal and natural gas to rise in cost over the next two decades. Among other things, coal power consumes more water than any other source of energy. That will drive up coal’s cost, as fresh water becomes scarcer due to the very climate change driven by coal power’s carbon emissions. And in America, at least, there’s evidence that the major proven natural gas reserves will peak out within the time frame of BNEF’s analysis, rendering the boom in that energy source decidedly temporary.

Meanwhile, while the costs of solar and other forms of renewables are currently lagging, they’re dropping fast:

BNEF’s analysts conclude that by 2020, large-scale solar PV will also be cheaper than coal and gas, when carbon prices are factored in. By 2030, dispatchable renewable generating technologies such as biomass and solar thermal could also be cost-competitive.

According to companies like Ratch Australia, in 2013 the cost of deploying new solar photovoltaics was  already down to between $120 and $150 per megawatt hour, suggesting it would be dropping even faster than BNEF concluded. Kobad Bhavnagri, head of BNEF’s clean energy research in Australia, expects that by 2020 or 2030 “we will be finding new and innovative ways to deal with the intermittency of wind and solar.” And since Australia is most likely set for baseload capacity until at least 2020, when solar as well as wind will be undercutting fossil fuels,

“it is quite conceivable that we could leapfrog straight from coal to renewables to reduce emissions as carbon prices rise.”

The world’s biggest manufacturer of wind turbines already has 50 percent of Australia’s market,which it expects to hold. And China’s largest manufacturer is eyeing the market as well. The deployment of rooftop solar is already dramatically reshaping the energy market in southern Australia, and the Green Party in Western Australia recently proposed installing solar panels on all public housing homes.

And while a move towards renewable energy by Australia’s economy certainly won’t fix global warming on its own, it’s a step in the right direction, away from the rash of heat waves and wildfires — worsened by the climate change driven by fossil fuels’ carbon emissions — that have recently slammed the nation – and continue to do so.

Bloomberg New Energy Finance

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