Energize Weekly, November 20, 2019
The cost of wind and solar generation continues to fall, though at a slower rate, and they are becoming competitive even without subsidies under “certain circumstances,” according to the financial consultant Lazard’s annual costs analysis.
The Lazard “levelized cost of energy” (LCOE) analysis covers eight types of renewable generation, as well as coal, natural gas and nuclear.
LCOE takes the cost of building and running a plant over its lifetime and divides that by all the electricity produced for a megawatt-hour (MWh) cost of electricity.
In the last five years, solar costs have decline at an annual average of 13 percent and wind at a rate of 7 percent. Over the last 10 years, solar costs have dropped 89 percent, and wind costs are down 70 percent.
“In light of material declines in the pricing of system components and improvements in efficiency, among other factors, wind and utility-scale solar PV [photovoltaic] have exhibited dramatic LCOE declines; however, as these industries mature, the rates of decline have diminished,” the Lazard analysis said.
Residential rooftop solar posted the most expensive electricity at $151 to $242 a MWh unsubsidized. When subsidies are added, the price drops to $139 to $222 a MWh.
Utility-scale silicon-cell solar was $36 to $44 a MW unsubsidized and $34 to $42 subsidized. Utility-scale using thin-film solar cells was $32 to $42 without subsidies and $31 to $40 when subsidies were added.
In 2009, utility-scale silicon-cell solar cost between $223 and $394 a MWh.
Onshore wind continued to be the lowest-cost renewable generation with an unsubsidized MWh price of $28 to $54 and $11 to $45 with subsidies.
“Lazard’s unsubsidized LCOE analysis indicates significant historical cost declines for utility-scale renewable energy generation technologies driven by, among other factors, decreasing capital costs, improving technologies and increased competition,” the study said.
The cost of new nuclear generation was between $118 and $192 a MWh, and a new coal plant was $66 to $152 a MWh.
Combined-cycle natural gas generation was the most competitive fossil fuel with a MWh cost of $44 to $68. Fuel prices could cut that to as low as $38 MWh or boost it to as much as $75 a MWh, the analysis said.
“In some instances, the capital costs of renewable energy generation technologies have converged with those of certain conventional generation technologies, which coupled with improvements in operational efficiency for renewable energy technologies, have led to a convergence in LCOE between the respective technologies,” Lazard said.
