Wind and solar power are getting cheaper, and renewable energy is starting to compete with new fossil-fuel plants. While they’re not as cheap as fossil fuels yet, and it won’t be cost-free to replace coal and gas plants, their continual decrease in price is auspicious.
1) Wind and solar power are getting cheaper. As the chart above shows, the cost of largeutility-scale photovoltaic plants and concentrated solar power plants have dropped sharply.Projects built in 2014 had a lower lifetime cost per kilowatt-hour than projects built in 2010. Both offshore and onshore wind farms also got cheaper, though the decline isn’t as dramatic.
By contrast, biomass, geothermal, and hydropower are all pretty mature technologies that haven’t seen big drops in cost lately.
For all technologies, there’s a wide range, since the cost of individual projects can vary dramatically from place to place. All else equal, wind turbines in windier areas will operate more often and have lower lifetime costs per kilowatt-hour than those in less-windy areas. More efficient technologies or cheap financing can also bring costs down. (That helps explain why solar power is three times costlier in sunny Central America than in North America.)
2) In some regions, renewables are getting competitive with new fossil-fuel plants. This point needs caveats, but it’s striking. The chart below has a beige box showing the range of estimates for building new coal or natural gas plants. The average cost of onshore wind is now well within that range. And in North America, utility-scale solar photovoltaic plants are creeping into range:
Now, these numbers leave a few things out. They don’t include the cost of backing up intermittent sources like wind and solar. After all, if you build a solar farm, you may need back-up power or energy storage for when the sun’s not shining. That’s an extra cost and a real disadvantage for renewables, particularly as wind and solar become a bigger part of the grid.
At the same time, these cost numbers also don’t factor in the damage caused by fossil-fuel pollution — including global warming. That’s a big disadvantage of fossil fuels. The chart below shows what happens if you factor both those things in. Wind is still competitive, as are the cheapest solar farms:
Okay, now the caveats. These charts don’t mean that renewables are now just as cheap as fossil fuels or that it will be cost-free to replace all our coal and gas plants with wind farms and solar panels.