Present prices of Renewable Energy
Introduction
Renewable
energy is derived from various natural processes, such as the Sun's
electromagnetic radiation, tides or heat generation within the Earth. Here is a
list of the main types of practically utilized alternative energy
sources:
- Sunlight: the solar
photon flux can be converted to heat, electricity or chemical energy;
- Wind: the motion
of air molecules can be harvested in wind turbines that spin the shaft of
electric generators or in windmills;
- Biomass: organic materials can be used for cooking and heating, as well
as to produce electricity and liquid transportation fuels;
- Earth's internal heat: can be used for heating and electricity production;
- Water: potential
and kinetic energy of flowing water can be tapped to produce electricity
or mechanical tasks.
Note that there is some controversy about classification of
nuclear power. Usually it is excluded from the list of renewables. However, it
is known, for example, that rivers eroding the Earth crust replenish Uranium
dissolved in seawater. Also, nuclear fission in so-called breeder reactors
creates more fissile isotopes than it consumes. So, although technically raw
nuclear fuels are finite, because of their enormously large amount and because
of the above replenishing processes, they might be considered RE as well. After
all, bio-fuels are finite too, but they are treated as RE.
Renewable energy
Renewable
energy sources are starting to dominate the power sector, with low-carbon
alternatives boasting environmental benefits at low costs. Technological advances and an increased
awareness of the dangers posed by climate change are driving the price of
renewable energy sources down.
Solar
and wind
The IRENA “Renewable Power
Generation Costs in 2017” report found that solar and onshore wind are the
cheapest energy sources, reporting that in 2017 wind turbine prices had an
average cost of $0.06 per kWh, though some schemes were $0.04 per kWh. The cost
of solar photovoltaic (PV) had fallen to $0.10 per kWh. In comparison,
electricity generation based on fossil fuels typically falls in a price range
of $0.05 to $0.17 per kWh.
Extensive investment and research into
these renewable sources have caused prices to continue declining over the
years. Between 2010 and 2017, the price of solar PV modules fell by almost
three-quarters, while wind turbine prices dropped by half over the same period.
Prices are continuing to decline, and a series of record-low auction prices for
solar PV, concentrated solar power, onshore wind and offshore wind power were
set in 2016-2017.IRENA predicts that within the next two years, solar and wind
projects will be able to deliver electricity for as little as $0.03 per kWh.
The cost of generation ., however, is
not a accurate indicator of the economic worth of an technology, both wind and solar have
availability issues , also the transmission and
reactive loads requirement add further cost .
Tidal
On the more costly end of renewable
energy is tidal power, currently up to ten times more expensive than more
established renewable such as wind and solar.Numerous tidal projects have been
scrapped in recent years due to high costs, for example the Swansea Bay tidal
lagoon in Wales. The UK Government rejected plans for the £1.3bn project in
January this year, deeming it too expensive compared to alternatives such as
offshore wind farms and nuclear power.
The expense of tidal projects is
predominantly due to the fact that the sector is still in the early stages of
development, compared with wind and solar which have received far more
investment and research to pull down costs and improve efficacy. So far,
government bodies have been the only ones to invest in the budding sector,
while solar and wind have received support from individuals and smaller organizations.
Advocates
for tidal power stress that while construction costs are high, tidal power has
one of the lowest operation and maintenance costs, with studies showing they
are usually less than 0.5% of initial capital costs. As such, some see it as an
untapped source with potentially great benefits.
Additional
storage costs
Despite the growing dominance of solar
and wind in the energy sector, the need to develop affordable storage solutions
to balance out intermittency issues continues to grow. Although the energy
sources are themselves free and infinite, bar on overcast or calm days, the
equipment and materials required to collect, store and transport the energy put
an additional price tag on these sources.
Financial
firm Lazard found that when the cost of batteries and inverters is added to
utility-scale PVs for ten hours of storage, the price rises from $46 per MWh to
$82, a higher figure than the $60 per MWh and $68 per MWh for coal and natural
gas, respectively.
Lazard’s analysis also found that
vanadium flow batteries had a minimum levelised cost of storage (LCOS) of $184
per MWh for distribution network applications and $209 per MWh for peaker
replacement. These costs for lithium-ion were $272 and $282, respectively.
The firm expressed its belief that the
high price of batteries would prevent renewable from completely overtaking
traditional power generation sources, saying: “Although alternative energy is
increasingly cost-competitive and storage technology holds great promise,
alternative energy systems alone will not be capable of meeting the base load
generation needs of a developed economy for the foreseeable future.”
Advantages and
disadvantages
Not surprisingly, each method of power generation has its
pros and cons. RE of course is inexhaustible and environmentally friendly. It
has another important advantage. Small individual power generators that are
integrated into the grid reduce the impact of blackouts caused by a failure of
centralized equipment or distribution lines. The distributed power technologies
in general improve the overall system security.
Notwithstanding their clear benefits, all forms of RE have their disadvantages too. Renewable resources are not always available where and when they are needed. For example, hydropower resources are limited by geography and are often located in remote areas. They require installation of expensive electric lines to the cities. Solar and wind power are intermittent by nature. Which brings us to another major technical issue with RE: the storage. One of the problems of electricity is that it cannot be efficiently stored in large quantities for later use. It is unpractical for example to have a battery backup in a gigawatt-scale power plant. Also, while RE systems generally do not produce as much air pollution as fossil fuels, they too have a certain negative impact on the environment. Finally, RE is still more expensive that traditional one. All the above factors are limiting the growth of RE. Currently, the share of renewable energy sources in net energy production is only about 10% worldwide and 8% in the United States.
Notwithstanding their clear benefits, all forms of RE have their disadvantages too. Renewable resources are not always available where and when they are needed. For example, hydropower resources are limited by geography and are often located in remote areas. They require installation of expensive electric lines to the cities. Solar and wind power are intermittent by nature. Which brings us to another major technical issue with RE: the storage. One of the problems of electricity is that it cannot be efficiently stored in large quantities for later use. It is unpractical for example to have a battery backup in a gigawatt-scale power plant. Also, while RE systems generally do not produce as much air pollution as fossil fuels, they too have a certain negative impact on the environment. Finally, RE is still more expensive that traditional one. All the above factors are limiting the growth of RE. Currently, the share of renewable energy sources in net energy production is only about 10% worldwide and 8% in the United States.
Power Plant Type
|
Cost
$/kW-hr |
Coal
|
$0.11-0.12
|
Natural
Gas
|
$0.053-0.11
|
Nuclear
|
$0.096
|
Wind
|
$0.044-0.20
|
Solar
PV
|
$0.058
|
Solar
Thermal
|
$0.184
|
Geothermal
|
$0.05
|
Biomass
|
$0.098
|
Hydro
|
$0.064
|
DOE
While raw forms of energy are both free and
practically infinite, the equipment and materials needed to collect, process,
and transport the energy to the users are neither one. Currently, the RE costs
are generally higher than that of fossil-based and nuclear energy. In addition
to this, unlike well-established conventional designs, the advancement in
different RE technologies still requires substantial investments. The
economists often use so-called levelized energy costs (LEC) when comparing different
technologies.
The LEC represents the total cost to build and operate a new power plant over its life divided to equal annual payments and amortized over expected annual electricity generation. It reflects all the costs including initial capital, return on investment, continuous operation, fuel, and maintenance, as well as the time required to build a plant and its expected lifetime. This table compares the US average levelized electricity cost in dollars per kilowatt-hour for both non-renewable and alternative fuels in new power plants, based on US EIA statistics and analysis from Annual Energy Outlook 2017. Note, that the numbers for each source are given for a different capacity factor, which complicates direct comparison. Notwithstanding, I believe these figures are useful in comparing different power generation methods.
The LEC represents the total cost to build and operate a new power plant over its life divided to equal annual payments and amortized over expected annual electricity generation. It reflects all the costs including initial capital, return on investment, continuous operation, fuel, and maintenance, as well as the time required to build a plant and its expected lifetime. This table compares the US average levelized electricity cost in dollars per kilowatt-hour for both non-renewable and alternative fuels in new power plants, based on US EIA statistics and analysis from Annual Energy Outlook 2017. Note, that the numbers for each source are given for a different capacity factor, which complicates direct comparison. Notwithstanding, I believe these figures are useful in comparing different power generation methods.
Also note that the values shown in the table do not include
any government or state incentives. In other words, they represent the actual
cost to the society. We can see that at present natural gas, geothermal and coals
are the most economic fuels. However, in future the price of coal-based
electricity can nearly double due to government imposed cost on CO2emissions.
Photovoltaic systems are still more expensive than fossil-based ones. The
values in the chart represent just the cost of electricity production- the
retail prices of course are always higher.
In conclusion, it is our responsibility to advance alternative power. However, we should remember that low-cost electricity generation is crucial to the economy. It increases income and employment in all sectors, the purchasing power of the consumer, and makes U.S. exports more competitive. RE certainly can supplement conventional power, and its use will likely continue to steadily grow. Nevertheless, realistically speaking, it can't entirely replace non-renewable fuels anytime soon.
In conclusion, it is our responsibility to advance alternative power. However, we should remember that low-cost electricity generation is crucial to the economy. It increases income and employment in all sectors, the purchasing power of the consumer, and makes U.S. exports more competitive. RE certainly can supplement conventional power, and its use will likely continue to steadily grow. Nevertheless, realistically speaking, it can't entirely replace non-renewable fuels anytime soon.
Renewable have costs below fossil fuels
For the first time in
history, the production cost of renewables is lower than that of fossil fuels,
an industry asset manager has claimed, fossil fuels generated energy costs in
the range of $49 and $174 per MWh (Megawatt hours) in G20 energy markets in
2017. Over a comparable period, renewable energy production came in between $35
and $54 per MWh. the international
average cost for hydroelectric projects were more than $50 per MWh, wind power
was $51 per MWh, and photovoltaic solar energy was $54 per MWh on average.
Renewable energy is
already less expensive than conventional energy. From now on, the digital
platforms that use the Internet of Things (IoT) and Smart Data will be the next
key factor to achieve the objectives of the Paris Climate Agreement and attract
more investors. "
The decrease in the cost of renewable energy, which is around
80% lower since 2010, for instance, in the photovoltaic solar sector, has
occurred for several reasons. These include technological improvements and the
competitive simplicity of renewables, through a broad base of project
developers, especially investment funds and banks, optimistic about the
unstoppable future of a market whose profitability continues to skyrocket even
once the subsidies have ceased, backed by a great social and political
support."
An assessment by ratings
agency Moody's that global green bond issuance is set
to eclipse $250 billion in 2018, with this year's growth exceeding the record $155 billion of
green bonds issued in 2017.
Indigenous sources of energy
Analysis presented
above does not consider the impact of the source of energy, in so far as if it
is imported or is indigenous. Imported energy imposes a cost and in developing
countries this results in balance of payment issues. The impacts of this are
felt on the value of currency , financial stability and export competitiveness.
If precious resources are diverted to import energy this will crowd out out
investments meant to increase rate of
development . All renewable sources of energy are domestic and therefore
command a premium when compared to imported fossil fuel options.
Barriers that impede addition of renewable energy
In March 2017, wind and solar accounted for10 percent of all US
electricity generation , it reflected a major
achievement for both technologies, which have overcome numerous barriers to
become competitive with coal, natural gas, and nuclear power.
But renewables still face major obstacles. Some are inherent
with all new technologies; others are the result of a skewed regulatory
framework and marketplace. This page explores the barriers to renewable energy
in detail, with a focus on wind and solar.
Capital costs
Even more
encouragingly, renewable energy capital costs have fallen dramatically since
the early 2000s, and will likely continue to do so. For example: between 2006
and 2016, the average value of photovoltaic modules themselves plummeted from $3.50/watt $0.72/watt—an
80 percent decrease in only 10 years.