Connect with us

Hi, what are you looking for?

CleanTechnica

Clean Power

US Fossil Fuels Losing Out To Wind And Solar

Originally published on RenewEconomy

The price of new power purchase agreements for wind farms and new solar projects in the US continue to defy all expectations, making some energy experts wonder why anyone would contemplate a new fossil-fuel plant. A new report by UBS analysts in the US has crossed our desk. It is basically a write-up from a webinar hosted by UBS and Declan Flanagan, head of local renewable energy group Lincoln Energy, but it provides some fascinating insight into what is happening in that market.

The first notable conclusion is the declining cost of wind energy. Contracts in Texas, which accounts for around one quarter of all US installations, are regularly below $30/MWh, and some are at $25/MWh. Even with a tax incentive, this still put wind well below $50/MWh.

Why is this happening? New equipment is lifting capacity factors by 5 percentage points, and Texas’ excellent wind conditions mean that wind farms are getting capacity factors in the high 40s or low 50’s (per cent). Nearly half of this occurs during peak load, defying most characterizations of wind as essentially an off-peak power source.

What does this mean? Greentech Media recently quoted Stephen Byrd, Morgan Stanley’s Head of North American Equity Research for Power & Utilities and Clean Energy, speaking at the Columbia Energy Symposium in late November: “Compare that to the variable cost of a gas plant at $30 per megawatt-hour. The all-in cost to justify the construction of a new gas plant would be above $60 per megawatt-hour.” So who would build gas?

Not as many people. Citigroup recently reported that some peaking gas plants were already being replaced by solar PV plants.

Why is this so? The UBS research note says that in Colorado, local utility Xcel has just announced new contracts for solar PV plants below 6c/kWh ($60/MWh). This, UBS said, was the lowest reported solar pricing it had seen in the US, although it confirms a recent survey by the National Renewable Energy Laboratory, which found pricing in that range and with no inflation kicker, meaning that the solar plants would be producing for an effective $40/MWh by the end of their contracts.

That would match even depreciated fossil fuel plants. The variable costs of gas fired plants are likely to be at least $30/MWh, and that does not include their capital costs.


Appreciate CleanTechnica’s originality? Consider becoming a CleanTechnica Member, Supporter, Technician, or Ambassador — or a patron on Patreon.
 
 
Have a tip for CleanTechnica, want to advertise, or want to suggest a guest for our CleanTech Talk podcast? Contact us here.
Written By

is the founding editor of RenewEconomy.com.au, an Australian-based website that provides news and analysis on cleantech, carbon, and climate issues. Giles is based in Sydney and is watching the (slow, but quickening) transformation of Australia's energy grid with great interest.

Comments

#1 most loved electric vehicle, solar energy, and battery news & analysis site in the world.

 

Support our work today!

Advertisement

Power CleanTechnica: $3/Month

Tesla News Solar News EV News Data Reports

Advertisement

EV Sales Charts, Graphs, & Stats

Advertisement

Our Electric Car Driver Report

30 Electric Car Benefits

Tesla Model 3 Video

Renewable Energy 101 In Depth

solar power facts

Tesla News

EV Reviews

Home Efficiency

You May Also Like

Clean Transport

Originally published on EVmatch. By Jeff Pickett There have been some exciting recent developments for adventuresome EVangelists such as myself. While much of driving for...

Batteries

Originally published on RMI.org. By Madeline Tyson President Biden’s infrastructure plan (The American Jobs Plan) aligns recovery stimulus and climate action. This is smart: experts conclude that the green stimulus delivers high returns...

Clean Power

Louisiana is poised to lead global green ammonia revolution if all goes according to plan, Mitch or no Mitch.

Clean Power

Rooftop solar, energy storage, and EV charging are front and center in Ford's plans for its Research & Engineering Center in Dearborn, Michigan --...

Copyright © 2021 CleanTechnica. The content produced by this site is for entertainment purposes only. Opinions and comments published on this site may not be sanctioned by and do not necessarily represent the views of CleanTechnica, its owners, sponsors, affiliates, or subsidiaries.