Renewable energy becoming more cost-competitive with fossil fuels is not news – as technology improves and more clean power generation comes online, electricity without emissions gets cheaper. One study shows just how much cheaper it’s become.
According to Lazard’s Levelized Cost of Energy Analysis, released by global financial advisor and asset manager firm Lazard Freres & Co, utility-scale solar photovoltaics (PV) and leading types of wind energy are leading the surge in clean energy technologies – the LCOE of both power sources has fallen by more than 50% since 2008. Lazard estimates that utility-scale solar PV is now a competitive source of peak energy compared to fossil fuel power in many parts of the world without subsidies.
In fact, Lazard finds certain forms of renewable energy generation are now cost-competitive with many fossil fuel generation sources at an unsubsidized LCOE, even before factoring in externalities like pollution or transmission costs. Specifically, solar PV and wind energy both fall within the range of $68-$104 per MWh, making them extremely competitive with baseload power from coal ($65-$145 per MWh), nuclear ($86-$122 per MWh), and integrated gasification combined cycle ($95-$154 per MWh).
The most promising potential for the future of renewable energy sources may be their value as distributed small-scale generation. Lazard estimates that the expensive capital construction costs of fossil fuel generation boosts their LCOE when utilities consider future resource planning across an integrated system, and make them less cost-competitive – without even considering externalities.