A new report from Bloomberg New Energy Finance has concluded that the levelized cost of electricity is closing between wind and solar with gas and coal.
Bloomberg New Energy Finance (BNEF) published its Levelised Cost of Electricity Update for the second half of 2015 this week, and concluded that onshore wind is fully competitive with gas and coal in certain parts of the world, while the gap continues to close for the remainder of wind and solar around the world.
“Our report shows wind and solar power continuing to get cheaper in 2015, helped by cheaper technology but also by lower finance costs,” said Seb Henbest, head of Europe, Middle East and Africa at Bloomberg New Energy Finance. “Meanwhile, coal and gas have got more expensive on the back of lower utilisation rates, and in Europe, higher carbon price assumptions following passage of the Market Stability Reserve reform.”
Specifically, Bloomberg shows that the global average levelized cost of electricity (LCOE) for onshore wind dropped down from 1H’15’s $85 per megawatt-hour (MWh) to $83 in the second half of 2015, while solar dropped from $129 to $122. Across the aisle, the LCOE for coal-fired generation increased from $66 per MWh to $75 in the Americas, $68 to $73 in the Asia-Pacific region, and $82 to $105 in Europe, while LCOE for combined-cycle gas turbine generation rose from $76 to $82 in the Americas, 85 to $93 in Asia-Pacific, and from $103 to $118 in Europe, the Middle East, and Africa region (EMEA).
There are more defined regional-specific variations highlighted in the report, accounting for some of the wider regional variations seen above.
“Generating costs continue to vary greatly from region to region, reflecting influences such as the shale gas boom in the US, changing utilisation rates in areas of high renewables penetration, the shortage of local gas production in East Asia, carbon prices in Europe, differing regulations on nuclear power across the world, and contrasting resources for solar generation,” said Luke Mills, analyst, energy economics at Bloomberg New Energy Finance.
“But onshore wind and solar PV are both now much more competitive against the established generation technologies than would have seemed possible only five or 10 years ago.”