New wind, solar and battery projects are getting so inexpensive that they rival the cost of building new gas or coal power plants in most of the world, according to an April 28 report by Bloomberg New Energy Finance (BNEF).
A solar or wind farm is now the cheapest kind of new power plant for two-thirds of the world’s population, according to BNEF. Those areas represent up 71 percent of gross domestic product and 85 percent of energy generation.
The cost of electricity around the globe has dropped by 9 percent for onshore wind and by 4 percent for utility-scale solar since the second half of 2019 — “a startlingly fast change for power plants that don't rely on traditional fuels,” as David Ferris put it in his EnergyWire story on the report.
The projects’ costs are declining as they get larger, achieving a scale that makes every part less expensive. In the last four years, the average size of a wind farm has more than doubled, from 32 megawatts to 73 MW, while solar farms have become a third larger.
The drop in the cost of renewables is certain to continue. "There are plenty of innovations in the pipeline that will drive down costs further," said Tifenn Brandily, a lead author of the report.
BNEF’s analysis measured the all-in costs of creating power, which means "development, construction and equipment, financing, feedstock, operation and maintenance."
Experts point out, however, that the pandemic could help coal and natural gas survive a bit longer than they would otherwise, mainly because the decline in electricity demand has driven down the prices of those two fossil fuels. "If sustained, this could help shield fossil fuel generation for a while from the cost onslaught from renewables," said Seb Henbest, chief economist at BNEF.
The coronavirus crisis is partly to blame for slowdowns in major U.S. offshore wind projects, Newsday’s Mark Harrington reported. Denmark-based Ørsted, the largest developer of offshore wind for the United States, said in late April that it expects delays on five major East Coast projects, citing impacts from the coronavirus pandemic and "prolonged" federal permitting.
In addition, the far-better-established onshore wind sector has some 25 gigawatts of planned projects at risk, or $35 billion worth of investment, according to an analysis by the American Wind Energy Association.
The Financial Times reported that the wind industry’s supply chain woes are putting “as much as 30 gigawatts of new capacity at risk in the US, China and Europe this year alone."
The good news for the U.S. wind industry is that during the year’s first quarter a record amount of capacity, about 24,690 MW, was under construction, as EnergyWire’s David Iaconangelo reported. Corporations and utilities contracted for a record volume of wind power via power purchase agreements. And the first 4-MW turbines went into service, marking the rise of a new crop of machines with unprecedented capacity factors.
As the world’s economies are drawing up rescue packages to staunch the damage caused by the pandemic, the UN, the International Energy Agency (IEA), EU officials and others are calling for seizing the opportunity to boost clean energy, Ben Geman noted in his Axios newsletter “Generate.” IEA said the world needed a wave of investment to restart the economy with “cleaner and more resilient energy infrastructure.”
Reinforcing that notion, a report by the Carbon Tracker Initiative, a climate finance think tank, found that developers risked wasting more than $600 billion if all mooted coal-fired plants were built. The Guardian’s Adam Morton quoted report co-author Matt Gray, who said that proposed coal investments risked becoming stranded assets that locked in increasingly expensive power for decades. “The market is driving the low-carbon energy transition but governments aren’t listening,” Gray said. “It makes economic sense for governments to cancel new coal projects immediately and progressively phase out existing plants.”
To accelerate the transition to renewable energy, Congress should put an honest price on carbon emissions. Models indicate that even a modest price of $25/metric ton of CO2 would trigger a significant shift toward renewable energy.