Posted by: maboulette | November 30, 2018

Its Cheaper To Build a New Wind Farm Then To Keep A Coal Plant Running


wind farm

Inflation dictates that the cost of living will continue to rise — except, it seems, when it comes to renewable energy. The cost of building a new utility-scale solar or wind farm has now dropped below the cost of operating an existing coal plant, according to an analysis by the investment bank Lazard. Accounting for government tax credits and other energy incentives would bring the cost even lower.

CHEAPER THAN KEEPING A COAL PLANT

“There are some scenarios, in some parts of the U.S., where it is cheaper to build and operate wind and solar than keep a coal plant running,” said a Lazard banker who was involved in the report. “You have seen coal plants shutting down because of this.”

ANALYZES ENERGY

Every year, the investment bank analyzes the cost of different types of energy using a metric called the levelized cost of energy, or LCOE. This analysis factors in the cost of components and the cost of operations, as well as the cost of debt, to come up with the smallest dollar amount, per unit of energy, for an investor in the project to see a 12 percent return.

PRICE OF COAL

The LCOE for coal this year is between $27 and $45 per megawatt. That figure is $29 to $56 for a wind farm and $31 to $44 for a solar farm, depending on the technology used.

PRICE OF WIND

Wind power costs have dropped as utilities have turned to bigger and bigger turbines, which can produce more energy. The largest turbines installed today can produce double the power they could’ve a decade ago, according to the Energy Information Administration, dramatically increasing the amount of power a parcel of land can produce. Wind and solar installation has also gotten more competitive, driving the development of more efficient technology.

EXCLUDES INDIA AND CHINA

The bank noted that this analysis applies to developed economies, and excludes places like India and China, parts of which are very dependent on coal. But in the U.S., coal plant construction has ground to a near halt, and many utilities are successfully making the case for renewables to their customers. This year has seen the second-higher number of coal plant retirements on record.

 


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