Renewable Prices Continue to Drop

November 8, 2019

PV Magazine:

Lazards has released their two levelized cost of hardware reports – 2019 Levelized Cost of Energy (pdf) and the 2019 Lazards Levelized Cost Storage (pdf) analysis. At a high level, both solar power and energy storage have shown continued price declines, but the numbers are of course much more complex.

Solar power’s utility scale price declines have slowed over time. The report suggests an unsubsidized utility scale solar power plant is going to generate electricity at a cost between 3.6 and 4.4¢/kWh. This price has fallen 89% over the past ten years, an average of 20% decline per year over the period. Over  5 years, that decline fell to 13%, and over the last year that price decline was 4-10%.

When adding in the 30% Investment Tax Credit for the US market, utility scale projects fall an additional 0.1-0.2¢/kWh.

Energy storage has also seen across the technology spectrum price delines, with lithium ion outpacing other sources of storage. However, the technology is still expensive with its use cases dictating when it can be used in a financially viable manner. The energy storage report’s financial modeling shows Levelized Project Internal Rates of Return (IRR) ranging from 35% for a standalone 100 MW / 100 MWh facility in the California Independent System Operator (CAISO) region, down to a 7.7% IRR for a 100 MW solar + 50 MW / 200 MWh storage sized facility in the Texas ERCOT region.

Bloomberg:

In the midst of otherwise depressing developments in the progress of climate change, one bit of good news shines through: The economics of renewable energy have been improving fast — especially those of onshore wind and utility-scale solar power. A new analysis of the levelized cost of energy from Lazard, the company I work for, shows that over the past year the cost of generating energy from wind projects fell by 4% and large solar projects by 7%.

The levelized cost of any particular energy technology is the break-even price that companies investing in that technology need in order to see a competitive rate of return. In the case of both utility-scale solar and onshore wind power, this rate has dropped to about $40 per megawatt hour — which is lower than the cost of building new power plants that burn natural gas or coal. It’s even close to being competitive with the marginal costs of running the coal and nuclear plants we already have.

Many forces have brought about this change, including steady improvements in technology and reductions in capital costs. And while the rate of decline has slowed a bit lately, especially for onshore wind (now dropping about 7% a year), costs for solar power at large scale have continued to fall rapidly (about 13% a year) for the past five years.

These trends are even starker when you take into account federal incentives for renewable energy. With government subsidies, the average costs of onshore wind ($28 per megawatt hour) and utility-scale solar ($36/MWh) are roughly equivalent to those of coal and nuclear generation ($34/MWh and $29/MWh, respectively). With the federal incentives, building new wind and solar facilities makes more sense than continuing to run old coal and nuclear plants. That is to say, we can reduce fossil-fuel consumption without undue economic disruption.

Several caveats are important. First, renewable-energy prices aren’t as favorable everywhere; regional differences in availability and fuel costs matter.

Second, the cost-competitiveness of certain renewable energy technologies doesn’t mean that they alone can provide all the power that’s needed. A variety of technologies will still be required for the foreseeable future. Wind- and solar-energy production is invariably intermittent, so is best complemented by conventional-generation technologies, of which combined-cycle natural gas typically remains the most cost-effective (and emits less carbon dioxide than coal does).

Third, in order to be able to use more wind and solar power, we’ll need to improve our ability to store that power. The good news here is that the costs of lithium-ion battery technology are falling, and at a faster pace than those of other storage technologies, Lazard has found.

RenewEconomy:

Wind and solar have been beating coal and nuclear on costs for a few years now, but Lazard points out that both wind and solar are now matching both coal and nuclear on even the “marginal” cost of generation, which excludes, for instance, the huge capital cost of nuclear plants. For coal this “marginal” is put at $US33/MWh, and for nuclear $US29/MWh.

marginal

Wind and solar have been beating coal and nuclear on costs for a few years now, but Lazard points out that both wind and solar are now matching both coal and nuclear on even the “marginal” cost of generation, which excludes, for instance, the huge capital cost of nuclear plants. For coal this “marginal” is put at $US33/MWh, and for nuclear $US29/MWh.

26 Responses to “Renewable Prices Continue to Drop”

  1. J4Zonian Says:

    PV Mag: “Solar power’s utility scale price declines have slowed over time.”

    Bloomberg: “And while the rate of decline has slowed a bit lately, especially for onshore wind (now dropping about 7% a year), costs for solar power at large scale have continued to fall rapidly (about 13% a year) for the past five years.”

    Hmmm.

    “With the federal incentives, building new wind and solar facilities makes more sense than continuing to run old coal and nuclear plants.”

    Doesn’t mention that without enormous federal and state incentives in the form of subsidies and externalities the coal industry wouldn’t exist any more in the face of low and dropping RE prices. The nuke and fracking industries would never have existed.

    “in order to be able to use more wind and solar power, we’ll need to improve our ability to store that power.”

    Nope, sorry. Especially in places where renewables are still very underused, solar and wind up can each be ramped up from near zero % to around 30% each, at least, before needing any solar. There are only 2 or 3 places in the US with that much of either, and none with that much of both.

    “Wind- and solar-energy production is invariably intermittent,[1] so is best complemented by conventional-generation technologies [2], of which combined-cycle natural gas typically remains the most cost-effective [3] (and emits less carbon dioxide than coal does).”[4]

    OK, this approaches the DOF (Density of Falsehoods) of one of the more dishonest denying delayalists. [1] Yes, intermittent, although now offshore wind is surpassng the capacity factor of US coal and gas. [2] No, it’s best complemented by targeted efficiency; different, complementary, clean safe renewable sources; similar clean safe renewable energy in a distributed grid; demand response; or storage. [3] Combined-cycle is cheaper than peaker gas burners but not well-suited to backing up intermittent energy sources. Isn’t that exactly what peakers are for? [4] Gas may emit less CO2 than coal (or it may not) but it emits more methane under almost all conditions, and is just as bad as coal for climate.

    https://electrek.co/wp-content/uploads/sites/3/2017/10/solar-possner-seasonality.jpg?quality=82&strip=all

    • Gingerbaker Says:

      Hi J4

      Did you intend to include the references?

      🙂

    • jfon Says:

      ‘…now offshore wind is surpassng the capacity factor of US coal and gas.’
      39.2 % , according to the rolling 12 month average for all UK offshore wind farms – not one reached 50 %.
      http://energynumbers.info/uk-offshore-wind-capacity-factors
      More to the point, the figures for coal and gas are mostly ‘availability factors’ – if somebody wants to buy power, they make it. For nuclear last year in the US, cf for the whole fleet was 92 %. For gas and coal, the main expense is the fuel, not the initial construction cost, so they’re quite happy to lower output when renewables are cranking ( and prices are low ), and then gouge the punters when they really need it.

      • J4Zonian Says:

        Almost every time I discount the relentlessness of ARFs and nook boosters et al and try to be even a tiny bit more concise I regret it. Edit: “the marginal capacity factor”—though that was intuitable from what I said, by anyone not trying to disunderstand or disinterpret.

        The first floating wind farm performed at 59% capacity factor for its first year, 65% for the winter and spring. The last is important because of what I tried to show above–the complementarity of wind and solar. The new Haliade-X [1] is also expected to perform at 63%, and others will do even better within a few years. We would have reached this point years ago—even decades—but fanatical opposition by fossil and fissile fuel industries, and the corruption that surrounds and sustains them has slowed progress tremendously.

        Practical cf of coal and gas keeps decreasing because nobody wants to buy their power during the ever-longer times it can’t compete with the decreasing prices of increasing amounts of wind and solar. The complementarity of those and other clean safe renewables means they’ll soon be able to meet most or all of our energy needs. 50 to 75% of US coal burners and nukes are losing money now. The less they run, the less profitable they are; they’re already spiraling down the drain. So no, I’m sure the owners aren’t happy to lower output; they do it because they have no other choice they’ll accept. That will get even worse, and more will close as the contracts propping them up run out and they’re no longer guaranteed sales—unless there’s more corruption, of course, like Ohio’s and many other states’ and the US as a whole. (Trump and Perry have been trying since 2016 to funnel money to corporations that can no longer compete in the market their officers profess to love. Each attempt has been justly ridiculed to death.

        And of course in the end, there’s a war on against the end of civilization, and fossil fuel use will have to end soon if we expect civilization to survive. To make that happen fast enough, we’ll have to cut subsidies, externalities and other support for both fossil and fissile fuels and concentrate on the only energy solutions that will work–efficiency, wiser lives, and clean safe renewable energy.

        The decline of the bad and growth of the good works out nicely with capacity factor as with amounts and everything else, though it’s not happening nearly fast enough. Except corruption and rent-seeking; they’re increasing rapidly as the magnates get desperate. (See about Murray?)

        And capacity factor only considers 100% production; the time the turbines are still producing, just not at 100%, is even longer and also increasing time and percent–the area under the curve. Building more flexible clean safe renewable generation and connecting them in a distributed generation smart grid will help replace fuels faster. Everything we can do to move that along is smart.

        [1] 12 MW offshore turbine being tested on the Rotterdam docks
        https://fotopaulmartens%5BDOT%5Dnetcam%5BDOT%5Dnl/futureland.php

        • J4Zonian Says:

          What a pain; it still turned the string into a corrupted hotlink.
          One more try:
          https://fotopaulmartens.netcam.nl/futureland.php

          double ewes [DOT]fotopaulmartens[DOT]netcam[DOT]nl/futureland[DOT]php

          …the world’s largest wind turbine, the 12 megawatt Haliade-X
          …will produce 45% more energy than any other offshore wind turbine currently available and will be capable of generating up to 67 gigawatt-hours (GWh) annually, enough renewable power for up to 16,000 European households.
          …will likely first appear in demonstration form in 2019 and begin shipping to wind farms as early as 2021.
          https://cleantechnica.com/2018/03/02/ge-announces-worlds-powerful-offshore-wind-turbine-haliade-x/

          120 Haliade-Xs will provide the same power as a typical nuke, built for less money in less time, with a high capacity factor (63%), paying back the carbon cost of their construction as they’re built. Widely distributed placement, and/or batteries or other storage can make its capacity factor at least as high as a nuke, still cheaper, faster, safer, cleaner. And of course, mixing wind power with solar and other clean safe renewables in interconnected grids is the only way to power a sustainable world.

          The largest in operation so far are a pair of 8.8 MW and nine 8.4 MW turbines off Scotland in the Vattenfall Wind Farm. 44% of Denmark’s electricity comes from wind—highest in the world so far. Vattenfall is 49 new wind turbines 25-40 km off Denmark’s west coast in the North Sea; it now provides about 12% of Danish wind power—enough for the yearly consumption of 425,000 Danish households.

          “20 of these [8.8 MW] turbines would cover the…electricity consumption of Liverpool.”
          Siemens Gamesa

          Also about to be deployed: 9.5 and 10 MW turbines.

          • jfon Says:

            ‘And capacity factor only considers 100% production; the time the turbines are still producing, just not at 100%, is even longer and also increasing time and percent–the area under the curve.’ Your understanding of capacity factors is flawed – unsurprising for an unreliables aficionado. You can scroll down to the load duration curves for some of the Danish offshore fleet here
            http://energynumbers.info/capacity-factors-at-danish-offshore-wind-farms
            The best individual wind farm, Anholt 1, performed at 95% of nameplate capacity, or above, for 17% of the time. For 66% of the time, it was above 20 % capacity, i.e. for a third of the time it was below a fifth of rated output. The fleet as a whole did a bit better, but was still below 25 % output for a third of the time.
            Having widely spread wind farms makes sense if they’re negatively correlated – when plant A is becalmed, plant B is usually cranking. To do that, you need a span of ~ a thousand miles, the approximate diameter of a weather cell. Spain has a weak negative correlation with Germany.
            http://euanmearns.com/the-wind-in-spain-blows/
            Putting high voltage power lines all over the planet will not be cheap – the Germans are having a ton of trouble just bringing two x 2 GW lines 700 km from northern to southern Germany. They’ll cost ten billion Euros. An all-renewables grid would require fifteen times as much capacity going all the way to North Africa, and probably Turkey and Russia as well, and would still need storage. That’s just for Germany; a network keeping all Europe’s lights on would be orders of magnitude bigger. Good thing solar’s so cheap! Although for negative correlation with solar, you ideally want the opposite hemisphere at 12 hours time zone difference.

  2. Gingerbaker Says:

    Also, the “Northern Hemisphere” is an awfully big place, and includes areas from the equator to the North Pole.

    Which brings up the idea that solar should be sited where it has maximized capacity factor. One wonders – what would be the capacity factor for solar in the Mojave? The Sahara, Gobi, Arabian? 90%?

    The Mojave, all by itself, could completely power the US and Canada. All we would then need to do would be to build the HVDC lines to distribute that power. You only need to build those HVDC lines once every century or so.

    • Brent Jensen-Schmidt Says:

      This is all very good, really is. The obligatory BUT is, massive local solar output only lasts 8 hours of 24, then on a good day, in season at nice latitudes. It CANNOT stand alone anywhere anyhow. This blindingly obvious fact is constantly ignored with marvelous theoretical capabilities. Go solar, go wind, go anything that actually WORKS.

      • Gingerbaker Says:

        “It CANNOT stand alone anywhere anyhow.”

        That’s not quite even technically true.

        Technically, we could connect all the equatorial desert PV farms with HVDC undersea cables. Boom – problem solved.

        Technically, we could build all sorts of storage-conversion strategies. The efficiency of electrolytic hydrogen production from water is WAY higher than most people realize, for example. It’s pushing 90%.

        Hydrogen fuel cells – in conjunction with cogeneration to harvest excess heat – supposedly are at 85% efficiency.

        And, it really doesn’t matter how efficient/inefficient these process are. Because they would be harvesting excess energy from RE farms. Completely free and clean energy. The additional upfront infrastructure cost to overbuild the total system, amortized out over the lifespan of the panels, HVDC lines, etc is incredibly tiny.

        I am not arguing we should go with only solar. But I do believe we *could*. And it might even be the most cost-effective way to solve the problem – who knows?

        • Brent Jensen-Schmidt Says:

          See the terms ‘pushing’ and ‘supposedly’ used judicially. First these systems that store enough extra energy, to fill the 12 to 18 hour gap in generation, need to become real. Problem to be solved. Then there are low sun days, or weeks. Storage requirements jump to 36 hours, or whatever, significantly above the minimum 12 hours. This will happen ( and at the most awkward time ) and that’s TU for the supply area, country, continent. Would be very nice to go 100% solar but we *can not*.

          • Gingerbaker Says:

            “Then there are low sun days, … This will happen ( and at the most awkward time )”

            I doubt it. What are the insolation characteristics of the Mojave, Gobi, Sahara, etc? What would the capacity factor of PV farms that would be located there be?

            You made a blanket statement – that solar alone could never work. Surely that is wrong – it could work.

            [From https://www.freeingenergy.com/how-much-solar-would-it-take-to-power-the-u-s/%5D:

            “Starting with some conservative assumptions from a 2013 National Renewable Energy Labs (NREL) report, we know that it takes, on average, 3.4 acres of solar panels to generate a gigawatt hour of electricity over a year. Given the U.S. consumes about 4 petawatt hours of electricity per year, we’d need about 13,600,000 acres or 21,250 square miles of solar panels to meet the total electricity requirements of the United States for a year.”

            The Mojave, curiously is almost exactly twice that size. Plenty of space to overbuild the capacity. And that 3.4 acres figure – from the NREL – is the => average <= . The insolation at the Mojave is likely twice the average.

            Therefore, the Mojave alone could produce about 300 – 400% of total US energy (not electricity – energy) needs all by itself.

          • Gingerbaker Says:

            Oops – my mistake! It’s not total energy, just electricity. We would need more than just the Mojave to power all our needs.

            Not a lot more. Just a little more.

          • Brent Jensen-Schmidt Says:

            Dear Orange person, we are talking at cross purposes. There is no doubt that proposal can produce the required power over time. It is enabling the 6 – 8 hour production time PD supplying energy 24/365 which is fantastical.
            You doubt a fail would happen at the worst time?
            Let me introduce thee to the great god SOD and his law giving first born son Murphy. Can GUARANTEE that a fail will be at a bad time.
            Personally would love the world to run totally on renewable s, but saving said world comes first.

    • J4Zonian Says:

      Of course, combining maybe a quarter to a third of this area with wind, hydro, geothermal and other clean safe renewable energy is the way we’ll go, and it’s a lot more spread out.

      Here’s the area needed for 100% of the world’s power provided by wind: https://www.basicknowledge101.com/photos/2014photos/Wind%20Energy%20world.jpg

      Both wind and solar maps are based on old enough tech specs that the areas needed now are even smaller. As both technologies continue to improve the area will continue to shrink. A lot of the solar area will be on already-taken-up land–roofs, parking lots, reservoirs, land wrecked by fossil fuel use… and how much do we care how much ocean area is taken up?

      And here’s another view: ilsr[DOT]org/wp-content/uploads/2016/09/imageedit_10_9751538828[DOT]png

  3. Sir Charles Says:

    GE Renewable Energy

  4. mboli Says:

    Once again showing that residential solar generation is 5x as expensive as utility solar.

    There is something wrong with our system when we as a society are putting so much investment into the least cost-effective solar energy.

    • J4Zonian Says:

      No, that’s not what it’s showing. When the data isn’t cherry picked to put residential solar in as bad a light as possible, it shows it’s about twice as expensive, since the low and high extremes are probably due to conditions that would apply to each equally in the same locale. IOW, you should compare low utility to low residential prices and high to high. At least part of their extra cost is offset by lower transmission costs.

      Avoiding transmission lines avoids fights over them, vulnerability, esthetic issues, and other problems.

      Residential solar also democratizes the energy supply, can help equalize society, and makes energy generation more visible to the public, increasing awareness of the ecological improvements involved, and of opportunities to follow the example. It makes more resilient micro-grids possible, while a distributed grid allows better coverage of society’s energy needs. All seems worth the price.

      • jfon Says:

        ‘Residential solar also democratizes the energy supply, can help equalize society..’ The opposite.Poor people are more likely to be renting than own houses, and if they own, less likely to have the spare capital for solar. Also, they’re more likely to be in shadier suburbs if they do own a house. Somebody at the university here developed an app which showed that better solar aspect was very closely matched to higher land values.
        ‘..makes energy generation more visible to the public.’ That’s one of the problems with wind and solar. They’re inherently up on display, so the owners can pat themselves on the back for their good behaviour, and the casual observer, seeing turbines and solar cells all over the show, thinks that we’ve got this thing licked. If they could see carbon dioxide, they’d know better.

      • mboli Says:

        The big increase in renewable generation has been in wind, which shot *way* ahead of solar generation. That would not have been the case if most of the investment in wind power had been sited at individual houses and industrial buildings.

        According to the Solar Energy Industries Association, residential and commercial-industrial solar were about 40% of new capacity installed in 2017 and in 2018.
        C&I runs about 3x the cost of utility solar, residential runs 5x to 6x.

        I do not dispute that there are some advantages to having solar generation capacity distributed to individual buildings. There are also advantages to utility-scale electricity generation.

        This seems out of balance. We could be installing twice as much solar generation capacity for the same money, and still be installing a substantial amount of local generation capacity.

      • Gingerbaker Says:

        “Residential solar also democratizes the energy supply”

        No, it *privatizes* the energy supply, which is the exact opposite of the way you use the term “democratizes”. Really really hate the marketeers of rooftop solar that use this ploy. Don’t fall for it.

        What would actually “democratize” the energy supply would be if everyone had an equal stake in it. If we all equally shared the ownership costs, risks, and benefits of our new energy future, then it would indeed be “democratic”.

        IOW, if we truly want democratic energy, we should insist on a publicly-owned national renewables-only electricity system.

        • J4Zonian Says:

          We should insist on a fully federally-owned and run national grid, made up of micro-grids for resilience. But we don’t have it yet, and may never; we’re up against psychopaths with more money than most of the rest of the world combined.

          You can’t privatize something that’s 99.9% privatized already. From extraction, transport, and construction, to grid operation and retail sales, our energy system is owned by and run for the profit of the owners of corporations that make up almost all the biggest and most profitable corporations in the world (and a few big private or essentially private utilities). Changing some of that to the energy equivalent of Jefferson’s smallholders or homesteaders, even though it leaves out the poor, is a significant improvement. Up to a point the more it takes over energy production the more it will reduce the ability of such corporations to control energy the way OPEC has, or use the profits for de-education, as most of the large fossil fuel corporations have for decades. Those corporations should be nationalized, and the criminally insane people running them should be prosecuted, but whether that will happen is unknowable now.

          http://www.tomdispatch.com/post/176627/tomgram%3A_naomi_oreskes%2C_why_science_failed_to_stop_climate_change/#more

          People often equate “solar” with “photovoltaics”. That leaves out 24/7 CSP, clothesline paradox energy (passive and active solar heating and cooling with built-in storage to reduce the demand on the grid in the first place, industrial heat, solar cookers too replace the burning of wood, dung and coal. It also includes Annual Cycle Energy Systems.
          https://insideclimatenews.org/sites/default/files/styles/colorbox_full/public/Geothermal-Home-Heating-529px.png?itok=VAIBI3pa

          • Gingerbaker Says:

            Not sure where you live, but in the US, the electricity sector has traditionally been the most publicly-owned sector of the economy. The number of of publicly- or cooperatively-owned producers far exceeds the number of privately-owned for-profit suppliers.

            However, the few privately-owned concerns do supply the most customers by far:

            znu7sy

            So, at least here, the tradition is public. The Dept of Energy is under the Executive Branch. A simple Presidential directive to initiate a full National Renewable Energy Electricity system could be the work of a single moment.

          • J4Zonian Says:

            The tradition may be in believing utilities are public, but actually, utilities effectively owned by the people are rare, and as you say, mostly smaller. Just as government itself has long been owned by corporations and the rich people who own them, utilities run by oligarch-owned governments are essentially owned by the rich. The ongoing deregulation/privatizeering regime has changed most of what little of that “tradition” we started with.

  5. J4Zonian Says:

    Operative word: “can”.

    Leave it to the Anti-Renewable Fanatics (ARFs) to try to blunt and distort into a negative any positive message about renewable energy.

    No one said RE would make homeless people mbillionaires or give everyone on Earth exactly the same income and wealth. (Other measures will be required for that.) Germany did and is democratizing its energy—with feed-in tariffs, for example.

    Anyone seeing a few houses with solar panels and concluding that the climate catastrophe is over must be so flabbergastingly stoopid and taken in by right wing lies it’s really a wonder even a professional ARF would empathize with him or her. Isn’t it?

    I was just reading a comment about Elon Musk, who finds a reason to say yes to something and then a way to make it happen. Anti-renewable ideologues pick at peripheral things that provide an opportunity for spreading any anti-renewable idea that occurs—as a way of constantly saying no. Denying delayalists, ARFs and spent fuel rods accomplish their goals in part just by being negative and argumentative, not speaking straight or about anything important, all of which tends to make people dislike and give up on the whole subject. That favors the status quo, which is temporarily profitable for the rich but death for us all. Of what use are facts and sense against such people and their delusions? It’s pointless to argue with them about reality, but equally harmful to cede the town square. No matter what we do short of deleting and banning them, we lose. Thus for 40 years we’ve been kept from doing what the world needs. What a pitiful and evil waste of a life.

    Most nook boosters are also free market acolytes, though the 2 things are utterly incompatible in reality. Call them acoLites; free marketeers who give up their religion anytime their bigmanlymachine bias is tripped. Solar and wind are simply too attuned for them; not forceful, coercive and domineering enough. It offends their felt certainty that the world is a harsh place requiring individual struggle and hierarchies; if it turned out to be a solar and wind world instead of an atom-smashing world it would mean the attachment problems they suffer from are in them and not the world. The pain of that realization is intolerable.
    Plus, libruls like renewables, which means most nook boosters can’t resist the compulsion to hate them. Though they usually deny it and profess to like RE, virtually everything they say about it either disparages it or insists on impossible conditions for accepting it. Or both.


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