If you still think wind and solar energy can’t possibly work because they’re too expensive, you’re trapped in time. As the technology improves and manufacturing of scale comes into full force we’re seeing prices per unit of energy dwindling. Elsewhere, regulations like price on carbon is making fossil fuel energy more expensive. According to the Bloomberg New Energy finance, on-shore wind energy has once again dropped in price and is competitive with conventional coal or gas fired energy. In some parts of the world, like Germany or UK, on-shore wind is up to 30% cheaper than fossil fuel energy. Apparently, we’re running out of reasons not to ditch fossil fuels in favor of renewable energy.
Bloomberg analyzed more than 50,000 projects and energy transactions to come up with a levelised cost of electricity (LCOE) for various energy sources. This takes into account factors like initial capital investment, maintenance cost, interest rates, but also subsidies and carbon pricing. For the second half of 2015, Bloomberg energy analyst found the average price of wind energy fell to $83, down from $85 in the first half, while that for crystalline silicon PV solar fell from $129 to $122.
Meanwhile, the LCOE of coal-fired generation increased from $66 per MWh to $75 in the Americas, from $68 to $73 in Asia-Pacific, and from $82 to $105 in Europe. The LCOE for combined-cycle gas turbine generation rose from $76 to $82 in the Americas, from $85 to $93 in Asia-Pacific and from $103 to $118 in EMEA.
In Germany and the UK, the LCOE for on-shore wind was $80 per MWh and $85 per MWh, respectively. For both countries the LCOE for coal and gas-fired was around $100 per MWh for both countries. In the US prices are similar sitting at $80 per MWh (wind) and $107 per MWh (solar), but coal and gas is still significantly cheaper costing only $65 per MWh.
Seb Henbest, head of Europe, Middle East and Africa at Bloomberg New Energy Finance, commented: “Our report shows wind and solar power continuing to get cheaper in 2015, helped by cheaper technology but also by lower finance costs. Meanwhile, coal and gas have got more expensive on the back of lower utilisation rates, and in Europe, higher carbon price assumptions following passage of the Market Stability Reserve reform.”
Some other key findings:
- the global average LCOE for offshore wind dropped from $176 per MWh, to $174, but is still the most expensive deployment of renewable energy;
- biomass incineration saw its levelised cost stay steady at $134 per MWh;
- the LCOE of nuclear varied from $261 to $158 per MWh across the world;
- in China, the LCOE for coal is $44 MWh. Wind and solar cost $77 and $109 per MWh, respectively.