Electrical Wholesaling’s editors are always looking for evidence that renewable energy sources are becoming more cost competitive with conventional power sources without the assistance of various federal, state and utility incentives. A recent report by Lazard Inc. seems to indicate that solar and wind – and particularly wind – are moving in that direction faster than we thought.
In his analysis of that report, John Hensley, AWEA’s senior director, research & analytics said in a AWEA (American Wind Energy Association) blog post that, “Both the wind and solar industries are driving down cost and improving technology performance, and the technologies are now in a better position to compete than ever before. In fact, according to Lazard, wind is the cheapest source of new power generation in many U.S. markets (regardless of incentives). Even more exciting, wind is quickly becoming competitive with existing conventional power plants, positioning it for continued growth in an era of relatively flat electricity demand.”
Hensley does say that wind energy’s cost competitiveness depends on the region of the U.S. “In areas where winds are strong and steady, wind is unambiguously the cheapest option for new power,” he writes. “Think of states like Texas, Oklahoma, Kansas, and up through the Dakotas. In these strong wind regions, Lazard pegs the levelized cost of energy (LCOE) for wind to be as low as $29 per megawatt hour (MWh) (see chart below). As you move to less windy places, the cost increases but wind remains competitive with other technologies.”
The Lazard report says that over the past nine years the cost to generate electricity from wind farms has decreased 69%. “The lowest cost MWh of wind energy generated in 2009 cost $101 to produce. Today, the same MWh costs $29. That is a $72 discount,” says Hensley. “If the industry can achieve the $20-$25/MWh price mark post-PTC, the economics will be even more compelling to use wind to supply more of America’s electricity moving forward."
