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4 stunning graphs to show how wind and solar compete with coal, gas

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Earlier this week we brought you a story – via the Financial Times – of the latest cost estimates from US advisory firm Lazard, which said that solar and wind energy were already competing with fossil fuels on an unsubsidised basis.

We’ve now gotten hold of the original report and are reprinting four graphs here, which we find quite stunning because it underlines how quickly the case for more fossil fuels is quickly being eroded. (Please click on graphs to enlarge).

The first graph, below, is on the unsubsidised levelled cost of energy – a comparison between various renewable technologies and the incumbent fossil fuels. It is based around US experience, so there is the advantage of local manufacturing, experience in installation and maintenance and, most importantly, a low cost of finance.

Wind, as low as $US37/MWh, and solar, as low as $60/MWh in 2017 and $72/MWh now, are competing with the cheapest coal and gas, are comfortably below most coal, gas and nuclear, and way below peaking gas plants, which incidentally, are already more expensive than battery storage and solar thermal with storage. Note that the technology costs do not come with grid integration costs, but nor do they include health, social and environmental impacts.

lazrad lcoe

The second graph looks at the cost of abatement. This has become a red-hot debate in Australia, where an assumed and highly contested high cost of abatement is being used as a excuse to dilute the renewable energy target. The conclusion here is policies designed to promote win and large scale solar could be very cost effective in limiting carbon emissions.

Wind energy, according to Lazard’s estimates, offer a net benefit of $31/tonne, and solar a slight cost of $7 a tonne. Little wonder, perhaps, that the likes of Warren Buffett are investing so heavily into renewables, and the Rockefeller heirs have announced plans to dump fossil fuels in favour of renewables.

lazard abatement

The next graph (below) is an analysis of the cost of large scale solar vs gas-fired peaking plants. Citigroup has already noted that plans for gas leakers in the US are being dumped in favour of solar (despite relatively low gas prices), and in Australia peaking gas use has been marginalised by the proliferation of rooftop solar.

This graph shows that according to Lazard data (they re using 26 per cent capacity factors for single axis tracking solar in Australia) the cost of solar is well below gas due to high fuel costs. It notes however, that solar lacks the dispatch characterises of conventional peaking technologies.

lazard solar gas

The last graph is on the recent history of wind and solar costs, just to illustrate how far the costs have fallen in the last five years. The 78 per cent fall in solar PV costs is well documented (in 2009 is was nearly $US400/MWh), but wind energy has also fallen dramatically over th same period. Lazard puts these cost falls down to material declines in the pricing of system components (e.g., panels, inverters, racking, turbines, etc.), and dramatic improvements in efficiency, among other factors.

lazard lcoe solar wind

   

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  • Sorry Giles but the first graph does not show “how wind and solar compete with coal, gas”. There is a disclaimer at the top of the graph which clearly says it does not include reliability-related considerations which can be substantial. These issues include power system inertia, frequency control and power system fault levels which add to the cost of wind and solar and MUST be included to give a real comparison.

    • Martin, as you well know – South Australia is at more than 40 per cent solar and wind and has required no such investment, as the market operator and the grid operator has made abundantly clear. But as Lazard also loin out, those costs do not ping coal and gas for their obvious health risks.

      • Giles the game will change as SA increases its use of wind and solar. It will probably need much more gas generation. Agree about the health risks from coal in particular. Not sure that biomass would be suitable substitute for gas. We live in interesting times ….

        • Ronald Brakels

          As gas has increased in price its use in SA has plunged. The gas powered Torrens Island Power Station, the largest in the state, is currently operating at only about 14% of capacity. The new Snowtown II wind farm as well as increased rooftop solar capacity has increased the state’s renewable capacity, but unfortunately some of the decline in gas use has been made up by coal with one of the two units of the brown coal Northern Power Station operating through the winter instead of sitting idle.

        • As Ronald says for gas – and as penetration increases, this technology comes along, and will be much cheaper in a few years …. http://reneweconomy.com.au/2014/battery-storage-make-reserve-coal-plants-redundant-80130

    • michael

      I thought the more ‘interesting’ waiver placed on a graph was solar compared with peaking gas but not taking into account battery storage. How can solar be a peaking source without batteries? so a bit redundant to compare with the higher cost ‘peaking’ form of gas and diesel generation. Just include the battery cost and make a relevant graph

      • Andrew Woodroffe

        Solar is a peaking source in summer, it is just not available at that time at 100% of rated output. In WA the aggregate at peak load is 28% of rated output (currently around 350MW). So, not 100% like fueled generation, but not 0% either. Of course, batteries will increase this 28% substantially.

      • Ronald Brakels

        Solar is not dispatchable, that is it can’t be switched on when needed, put it does supply electricity during the period of peak demand which is hot summer afternoons. As we saw last summer during a horrible heatwave it’s very helpful for meeting demand when we most need it.

  • JeffJL

    Chart 2. Is nuclear power really that cheep?

    • Ronald Brakels

      No, it’s not. If it goes ahead the Hinkley C nuclear plant in the UK will recieve about 15 US cents a kilowatt-hour for the electricity it produces. That’s about 40% more than what chart 2 says for the levelized cost of energy and that does not include insurance to cover the cost of major nuclear accidents. I would check the other figures on the chart but it’s too hard to read.

  • Les Johnston

    Information on unsubsidised energy costs are hard to come by so it is good to get US data. The opportunity to divert any excess solar generation into hot water via the “off-peak” network provides a way forward. Excess solar should never be seen as a “problem.” The problem relates to the current pricing structure for household off-peak which props up the fossil coal generators. Off-peak enables coal generators to operate 24 hrs and not have to do a daily shut down. So there are two problems: coal off peak cross subsidy and solar not being available at night. (plus a few more).