We recently saw the International Energy Agency (IEA) report that solar power offers the cheapest electricity in history. That was a global report. A US-focused report from Lazard recently reported something similar. The highly regarded energy analysts showed that wind and solar offer the cheapest electricity in the country, even significantly undercutting natural gas combined cycle power plants now. But that’s only half of it.
Solar & Wind Energy Are Cheaper — Much Cheaper
Historically, when we write about such reports, we — and the analysts we’re referencing — are comparing estimated electricity costs from new power plants. However, for at least a few of these reports, Lazard has been including average electricity cost from already built power plants — just the operational costs (the brown diamonds in the chart below). The latest report shows that new wind and solar power plants can even provide electricity more cheaply than existing, in-operation natural gas, coal, and nuclear power plants! This is where things get interesting.
We’re at a kind of crossover point right now, but if solar and wind continue to come down in cost while the others stay the same or get more expensive, there will be serious pressure to retire fossil and nuclear power plants early and scale up wind and solar power production even faster. Why pay more for electricity from old, dirty power plants when you can get it more cheaply from new, clean, green electricity?
(Side notes: the light blue diamond is for offshore wind, the green diamond captures the price with 20% green hydrogen used in the natural gas combined cycle power plant, and the dark blue diamond captures the price with 20% “blue hydrogen” used in the natural gas combined cycle power plant.)
Here’s another chart looking at electricity costs from new wind and solar power plants versus marginal costs from existing fossil and nuclear power plants:
Not too bad.
Much more is available in the Lazard report examining levelized cost of electricity (LCOE) — aka the average cost of electricity production from a power plant across an estimated plant lifetime, or 20 years — including shorter comparisons in several other nations. The short story, though, is that solar and wind are much cheaper basically everywhere.
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