Dive Brief:
- The cost of electricity from wind and solar resources in some markets now beats coal and natural gas and the trend is accelerating, especially in the Midwest and Southwest, the New York Times reports.
- Investment banking firm Lazard’s most recent levelized cost of energy (LCOE) analysis shows utilityscale solar energy is as low as $0.056 per kilowatthour with subsidies and about $0.072 unsubsidized, wind is as low as $0.014 per kilowatt-hour with subsidies and $0.037 without, while natural gas is $0.061 per kilowatt-hour, and coal is $0.06.
- Austin Energy recently completed a power purchase agreement (PPA) for solar at under $0.05 per kilowatt-hour. In Oklahoma, Grand River Dam Authority announced a PPA it said would save customers an estimated $50 million and American Electric Power tripled its wind acquisitions on the strength of low bids.
Dive Insight:
The LCOE is a useful but incomplete comparison of generation resources. It fails to include fossil fuel health and societal impacts or the economic impacts of fossil fuel price volatility. For renewables, it fails to consider some factors needed to integrate variable resources into power markets.
The LCOE for fossil fuels also does not include the increasing costs of climate change. And the LCOE for nuclear power does not include the costs of accidents like the 2011 Fukushima plant meltdown or the cost of insurance against such accidents.
The price of solar has fallen 70% since 2008 and the Midwest PPA price of wind fell over 50% in the last 5 years.
Solar advocates nevertheless hope to extend their 30% investment tax credit beyond its scheduled 2016 transition to 10% and wind lobbyists are currently fighting on Capitol Hill for an extension of their $0.023 per kilowatt-hour production tax credit through the end of 2015.
