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Lazard: Renewables at an ‘inflection point,’ with new solar, wind cheaper than existing coal

November 09, 2018

Engineering News:

A new US study comparing the costs of energy from various generation technologies indicates that an “inflection point” has been reached where, in some cases, it is more cost effective to build and operate new renewable-energy projects than to maintain existing conventional generation plants.

The finding is contained in Lazard’s latest ‘Levelized Cost of Energy (LCOE) Analysis’, which the financial advisory firm compiles yearly. The report has been released together with the company’s latest ‘Levelized Cost of Storage Analysis’, which points to significant cost declines across most use cases and technologies.

The analysis shows that the cost of generating electricity from utility-scale solar photovoltaic (PV) and onshore wind continued to decline last year, with solar PV decreasing by 13% and onshore wind by almost 7%. Decreases since 2009 are more dramatic, with the mean unsubsidised LCOE for solar PV falling 88% and onshore wind decreasing by 69% over the nine years surveyed by Lazard in the report.

The analysis shows the “low-end” levelised cost of onshore wind-generated energy to be $29/MWh, below the average illustrative marginal cost of $36/MWh for coal in the US. The levelised cost of utility-scale solar, meanwhile, is stated to be nearly identical to the illustrative marginal cost of coal.

“Although diversified energy resources are still required for a modern grid, we have reached an inflection point where, in some cases, it is more cost effective to build and operate new alternative energy projects than to maintain existing conventional generation plants,” Lazard power, energy and infrastructure group head George Bilicic says in a statement. “As alternative energy costs continue to decline, storage remains the key to solving the problem of intermittency and we are beginning to see a clearer path forward for economic viability in storage technologies,” Bilicic adds.

The Lazard findings are significant for the US, with the calculations pointing to the possible further early retirements of coal-fired plants, notwithstanding President Donald Trump’s campaign promise to revive the coal industry.

More: Lazard says ‘inflection point’ reached making new renewables cheaper than existing coal

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