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.
Furthermore, it also
claimed that renewable energy presents the best alternative to the high cost of
nuclear power as well, as governments attempt the decarbonization challenge. The
latest photovoltaic energy auctions in Dubai, Mexico, Chile, Abu Dhabi or Saudi
Arabia, and onshore wind energy in Brazil, Canada, India or Morocco in 2017
suggested that the standard cost of energy can be reduced to $30 per MWh from
2018 . However, onshore wind energy has already achieved similar costs in
projects across Brazil, Canada, Germany, India, Mexico and Morocco, already
reaching $30 MWh."
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
Renewables are cheap to operate, but can be expensive to build. The most obvious and
widely publicized barrier to renewable energy is cost—specifically,capital costs, or
the upfront expense of building and installing solar and wind farms. Like most
renewables, solar and wind are exceedingly cheap to operate—their “fuel” is
free, and maintenance is minimal—so the bulk of the expense comes from building
the technology. The average cost in
2017 to install solar systems ranged from a little over $2,000 per kilowatt
(kilowatts are a measure of power capacity) for large-scale systems to almost
$3,700 for residential systems. A new natural gas plant might have costs around
$1,000/kW. Wind comes in around $1,200 to $1,700/kw.
Higher construction
costs might make financial institutions more likely to perceive renewables as
risky, lending money at higher rates and making it harder for utilities or
developers to justify the investment. For natural gas and other fossil fuel
power plants, the cost of fuel may be passed onto the consumer, lowering the
risk associated with the initial investment (though increasing the risk of
erratic electric bills).
However, if costs over
the lifespan
of energy projects are taken into account, wind and utility-scale solar can be
the least expensive energy generating sources . As of 2017, the cost (before
tax credits that would further drop the costs) of wind power was $30-60 per
megawatt-hour (a measure of energy), and large-scale solar cost $43-53/MWh. For
comparison: energy from the most efficient type of natural gas plants cost
$42-78/MWh; coal power cost at least $60/MWh.
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.
Siting and
transmission Selecting
an appropriate site for renewables can be challenging. Nuclear power, coal, and natural
gas are all highly centralized
sources of power, meaning they rely on relatively few high output power plants.
Wind and solar, on the other hand, offer a decentralized
model, in which smaller generating stations, spread across a large
area, work together to provide power. Decentralization offers a few key
advantages (including,
importantly, grid resilience), but it also presents barriers: siting and
transmission. Siting is the need to locate things like
wind turbines and solar farms on pieces of land. Doing so requires
negotiations, contracts, permits, and community relations, all of which can
increase costs and delay or kill projects. Transmission refers to the power lines and infrastructure needed to move electricity
from where it’s generated to where it’s consumed. Because wind and solar are
relative newcomers, most of what exists today was built to serve large fossil
fuel and nuclear power plants. But wind and solar farms aren’t all sited near
old nuclear or fossil fuel power plants .
To adequately take advantage of these resources, new transmission
infrastructure is needed—and transmission costs money, and needs to be sited.
Both the financing and the siting can be significant barriers for developers
and customers, even when they’re eager for more renewables—though, again, clean
energy momentum is making this calculation easier.
Market entry
US electricity sources, 2016.
Renewables face stiff competition from more established, higher-carbon sectors.
For
most of the last century US electricity was dominated by certain major players,
including coal, nuclear, and, most recently, natural gas. Utilities across the
country have invested heavily in these technologies, which are very mature and
well understood, and which hold enormous market power. This situation—the
well-established nature of existing technologies—presents a formidable barrier
for renewable energy. Solar, wind, and other renewable resources need to
compete with wealthier industries that benefit from existing infrastructure,
expertise, and policy. It’s a difficult market to enter. New energy
technologies—startups—face even larger barriers. They compete with major market
players like coal and gas, and
with proven, low-cost solar and wind technologies. To prove their worth, they
must demonstrate scale: most investors want large quantities of energy, ideally
at times when wind and solar aren’t available. That’s difficult to accomplish,
and a major reason why new technologies suffer high rates of failure. Increased
government investment in clean energy—in the form of subsidies, loan
assistance, and research and development—would help.
Unequal playing field
Oil Change
International estimates that
the United States spends $37.5 billion on subsidies for fossil fuels every year. Through
direct subsidies, tax breaks, and other incentives and loopholes, US taxpayers
help fund the industry’s research and development, mining, drilling, and
electricity generation. For decades, the
fossil fuel industry has used its influence to spread false or misleading
information about climate change—a strong motivation for choosing low-carbon
energy sources like wind or solar (in addition to the economic reasons).
Industry leaders knew about the risks of global warming as early as the 1970s,
but recognized that dealing with global warming meant using fewer fossil fuels.
They went on to finance—and continue to fund—climate disinformation campaigns, aimed
at sewing doubt about climate change and renewable energy. Their efforts were
successful. Despite widespread scientific consensus, climate
action is now a partisan issue in the US congress, complicating efforts to move
from fossil fuels to clean energy. The disconnect between science and policy
means that the price we pay for coal and gas isn’t
representative of the true cost of fossil fuels (ie, it doesn’t
reflect the enormous costs of global warming and other externalities). This in
turn means that renewables aren’t entering an equal playing field: they’re
competing with industries that we subsidize both directly (via government
incentives) and indirectly (by not punishing polluters). Emission fees or caps on total
pollution, potentially with tradable emission permits, are examples
of ways we could use to help remove this barrier.
Reliability
misconceptions
When done correctly, reliability
isn't a concern with wind and solar—it's actually a strength. Renewable energy
opponents love to highlight the variability of the sun and wind as a way of
bolstering support for coal, gas, and nuclear plants, which can more easily
operate on-demand or provide “base load” (continuous) power. The argument is
used to undermine large investments in renewable energy, presenting a
rhetorical barrier to higher rates of wind and solar adoption. But reality is
much more favorable for clean energy. Solar and wind are highly predictable,
and when spread across a large enough geographic area—and paired with
complementary generation sources—become highly reliable. Modern grid technologies like advanced
batteries, real-time pricing, and smart appliances can also help solar
and wind be essential elements of a well-performing grid. Tests performed in California, which has some of
the highest rates of renewable electricity use in the world, provide real-world
validation for the idea that solar and wind can actually enhance grid
reliability. A 2017 Department of Energy report confirmed
this, citing real-world experience and multiple scientific studies to confirm
that the United States can safely and reliably operate the electric grid with
high levels of renewables. Many utilities, though, still don’t consider the
full value of wind, solar, and other renewable sources. Energy planners often
consider narrow cost parameters, and miss the big-picture, long-term
opportunities that renewables offer. Increased awareness—and a willingness to
move beyond the reliability myth—is sorely needed.
Update
Prices could be as low as three cents per kilowatt-hour for onshore wind and solar photo voltaic projects over the next two years. The average by 2020 is expected to be around five cents for onshore wind and six cents for solar photovoltaic auctions.
Hydro power was the cheapest at five cents per kilowatt-hour, onshore wind at six cents, and bio energy and geothermal sources at seven cents. Solar projects are still high in comparison at 10 cents per kWh
Wind takes a
beating from solar
Sixteen
solar projects have been selected at an average price of €54.94/MWh (6.3 c/kWh).
They were "more competitive" than any of the wind power projects the
tender was launched as an experiment to test the advantages and disadvantages
of technology-neutral tenders as promoted by the European Union. A similar
technology-neutral tender in Germany in April yielded the same
result, with solar projects winning all of the available capacity. Wind and solar are in fact not competitors and
complement each other, the latest trends are to have hybrid solar and wind
power plants.
:Indigitization : June,30,2019:
India has placed special emphasis on harnessing the abundant Solar energy the
country receives and producing power through it. With the government of India’s
focused efforts in democratising the use of Solar energy, the International
Renewable Energy Agency (IRENA) survey in its research found out that India is the world’s cheapest producer
of Solar power.
Owing to low-cost panel imports from China, abundant land and
low wage labour, the cost of building large-scale solar installations in India
fell by 27 per cent in 2018, Year-on-Year. The cost of large-scale
installations in Canada is highest amongst the countries involved in producing
power using Solar energy, almost thrice that of India’s cost.
-
Status of renewable: July, 18, 2019: In recent years, the world has marched towards renewable energy.
According to a new report by the International Renewable Energy Agency (IRENA),
unsubsidized renewable energy is now most frequently the cheapest source of
energy generation. The report finds that the cost of installation and
maintenance of renewables, which was an important stumbling block to mass
adoption, continues on a downward trajectory.
Adding to existing efforts made by governments and businesses,
these lower costs are expected to propel the mass adoption of renewables even
further. The report further touches on the importance of renewables in
sustainable development and the need for governments to help achieve the
climate goals of the Paris Agreement, coming just months before the United
Nations’ Climate Action Summit being held in Abu Dhabi in September this year.
Among other findings the IRENA report highlights that:
- Onshore wind and solar PV
power are now, frequently, less expensive than any fossil-fuel option,
without financial assistance.
- New solar and wind
installations will increasingly undercut even the operating-only costs of
existing coal-fired plants.
- Low and falling technology
costs make renewables the competitive backbone of energy decarbonization –
a crucial climate goal.
- Cost forecasts for solar
PV and onshore wind continue to be revised as new data emerges, with
renewables consistently beating earlier expectations.
Further data from REN21’s Renewable Global Status Report show that over one fifth of
global electrical power production is now generated from renewables.
Renewables can’t yet provide all of our energy or even most of it,
but that’s mostly due to a lack of effort by governments. And we will still
need some sort of baseline load input to back it up, but that need not be
generated using fossil fuels (nuclear power provides a safer alternative for a
minimum baseline load). But like nearly all technology, the more it’s adopted
and used, the cheaper it becomes. And we can use it without the emission of
greenhouse gases that cause global warming and the innumerable other forms of
environmental damage that comes from fracking for natural gas, leaching tar
sands oil, coal ash ponds and a thousand other things.
What we need is a massive infrastructure program to speed up the
adoption and use of solar and wind technology, even bigger than the Tennessee
Valley Authority project. It will lead to a huge number of new, good paying
jobs and the first serious effort to transition to a 21st century power
generation revolution.
