The Weekend Wonk: New Energy Price Numbers, and What They Tell Us

October 23, 2020

Turns out, it’s actually cheaper to save the planet than it is to burn it up.

Among energy nerds, the annual Lazard Levelized Cost of Energy numbers are anticipated like Climate nerds anticipate the September Sea Ice minimum, or NASA GISS Average Annual Temperatures.

This year continues the trend. Solar and Wind are the cheapest sources of new electrical energy. Gas is still competitive – but the industry is on the ropes due to Covid and the global economic crisis.

The numbers confirm the stories I’ve been telling in the Yale Climate Connections videos over the last year.

The numbers show a 90 percent decrease in the cost of utility scale photovoltaic (PV) solar since 2009.

For wind, the decrease has been 71 percent during the same period.

Serious Conservative players in the energy industry are moving hard toward renewables.

While investment firms signal more and more that smart money is flowing to renewable energy and climate mitigation.


12 Responses to “The Weekend Wonk: New Energy Price Numbers, and What They Tell Us”

  1. grindupbaker Says:

    $/MWh is (I mean literally) meaningless for an energy source unless it’s the average for its life, in which case it’s meaningless unless its life is shown. $/MWh is the cost metric for energy storage, $/MW is the cost metric for energy source.

    • mboli Says:

      Once again, yes the Lazard LCOE report shows the cost per MWh of the electricity produced over the lifespan of the generating station.

      • greenman3610 Says:

        that was my understanding.
        Per Wiki:
        The levelized cost of energy (LCOE), or levelized cost of electricity, is a measure of the average net present cost of electricity generation for a generating plant over its lifetime

      • Gingerbaker Says:

        Lazard assumes solar PV has a lifespan of 30 years. It is more likely closer to 120 years. Divide PV cost by 3 to be conservative to get true cost.

  2. indy222 Says:

    Do those LCOE costs include the energy storage needed to make solar and wind take over from always-on power? Because if they don’t, they’re not a fair comparison.

    • greenman3610 Says:

      all sources of energy need backup. It’s called spinning reserve, and it allows, for instance, nuclear plants to shut down 4-6 weeks for refueling.
      You can’t build any kind of power plant without showing how it’s backed up.

    • rhymeswithgoalie Says:

      Do those LCOE costs include the energy storage needed to make solar and wind take over from always-on power? Because if they don’t, they’re not a fair comparison.

      It’s hard to make a “fair comparison” among such disparate technologies. For example, the nuclear cost has the note:
      “[4] Unless otherwise indicated, the analysis herein does not reflect decommissioning costs, ongoing maintenance-related capital expenditures, or the potential economic impacts of federal loan guarantees or other subsidies.”

      The ongoing addition of storage technologies will reduce the “always-on power” needs of the old-school just-in-time grids. Also, please remember that “always-on” power isn’t always on: Nuclear plants, for example, have had to be taken down due to excessive heat right in the middle of…heat waves. California had brownouts because of maintenance of traditional power plants scheduled during the summer season (Gov. Newsom was pissed).

      In any case, the vast majority of power outages come from weather events taking down above-ground power lines, a problem unrelated to the power source, though it would be somewhat mitigated by decentralization of the grid. (Brother lost power from Hurricane Laura on August 27 until Oct 17.)

  3. mboli Says:

    The report includes levelized cost of storage separately.

  4. It looks like soalr and wind energy have reached there minimum levelized cost. It will be difficult to get them much lower. But with this price level it can compete with fossil fueled energy.

  5. mboli Says:

    The statistic in the Lazard LCOE reports which has remained consistent over the years is that residential rooftop solar is very expensive.

    Our current level of investment in solar electricity production would be a lot more productive if applied to utility-scale or even community solar projects, as opposed to residential rooftops.

    I’m not opposed to people investing in home solar electricity. I think there is something awry in our regulatory or market structure which is channelling so much investment into the least effective option.

    I noticed that Com Ed (Illinois electric utility) is starting to promote individual investment in community solar projects. The Lazard reports prices community solar projects as intermediate between utility-scale and residential: not the cheapest but not awful. The Com Ed website suggests they will be offering customers the opportunity to invest in community solar, but it doesn’t show any projects yet.

    • greenman3610 Says:

      Home rooftop solar is expensive, and only practical for the 24 percent or so that have appropriate south facing unobstructed roofs.
      That said, the cost barrier is being overcome in states that offer a “net metering” policy that allows for a reasonable payback when homeowners feed excess power on to the grid. In those states, solar companies are offering free installation of solar equipment, to be paid back thru savings on electric bills and/or revenue from power sales.

      That is different from state to state, I am not familiar with Illinois – (wonks weigh in)
      A lot of utilities are opposing these kind of net metering regs, in favor of more or less keeping the model where they are the major energy producers.
      Right or wrong, this idea is probably time limited by the advances and cost reductions in battery storage. At a certain point, first bigger users, then the rest of us, may see the advantage of storing energy during low cost times, at night, and then using that stored energy during more expensive peak times, in the afternoon, when traditionally utilities count on making most of their profits.
      Sooner or later these trends are going to collide.
      In the meantime, many utilities are trying to square the circle with “community solar’ hybrid arrangements. I don’t know enough about them to make much sense on the idea. Welcome any additional info.

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