Utilities that need to build new power generation facilities or replace old ones are going to have a hard time justifying anything but renewable energy in 2017 and beyond. Investment bank Lazard recently released its 11th analysis of the cost of new electricity generation, titled Lazard’s Levelized Cost Of Energy Analysis–Version 11.0, and showed that wind and solar energy are now cheaper than diesel, nuclear, coal, and in most cases natural gas.
Utilities and regulators are going to be hard-pressed to justify anything but renewable energy generation in the future. From Maine to Hawaii, the U.S.’s energy future is renewable.
The table below shows Lazard’s analysis of the cost, on a per kWh basis, to build new power plants with different fuel sources and technologies. You can see that the lowest cost option is wind at 3 cents per kWh, followed by gas combined cycle that’s as cheap as 4.2 cents per kWh, and solar, which costs between 4.3 cents and 5.3 cents per kWh.
|Energy source||Low-End Estimate||High-End Estimate|
|Crystalline Utility-Scale Solar PV||4.6 cents per kWh||5.3 cents per kWh|
|Thin-Film Utility-Scale Solar PV||4.3 cents per kWh||4.8 cents per kWh|
|Wind||3 cents per kWh||6 cents per kWh|
|Coal||6 cents per kWh||14.3 cents per kWh|
|Natural Gas Combined Cycle||4.2 cents per kWh||7.8 cents per kWh|
|Nuclear||12.2 cents per kWh||18.3 cents per kWh|
|Diesel||19.7 cents per kWh||28.1 cents per kWh|
What you’ll also notice is that the range of costs is much wider for fossil fuels like natural gas. That’s because construction costs can be different depending on the state, fuel prices, and how often the plant is being used. Renewable energy, on the other hand, gets to cut to the front of the line on the grid, meaning nearly 100% of its electricity production is used, allowing for predictable electricity pricing.
What’s clear is that diesel, nuclear, and coal are all higher cost than both wind and solar energy on a per kWh basis. No matter how you slice it, renewable energy is winning versus fossil fuels on economics.
I’ll also point out that there’s no fuel cost risk for renewable energy. The wind and sun are zero-cost fuel sources, unlike extracted fuels, which could conceivably spike from current levels.
It wasn’t long ago that Lazard’s analysis wasn’t so favorable to renewable energy. In 2010, version 4.0 of Lazard’s levelized cost of energy study had wind costs at 6.5-11.0 cents per kWh and solar at 13.4-19.4 cents per kWh. Natural gas, coal, and nuclear all beat solar on a cost basis, and in some cases beat wind.
|Energy source||Low-End Estimate||High-End Estimate|
|Crystalline Utility-Scale Solar PV||13.4 cents per kWh||15.4 cents per kWh|
|Thin-Film Utility-Scale Solar PV||13.4 cents per kWh||18.8 cents per kWh|
|Wind||6.5 cents per kWh||11.0 cents per kWh|
|Coal||6.9 cents per kWh||15.2 cents per kWh|
|Natural Gas Combined Cycle||6.7 cents per kWh||9.6 cents per kWh|
|Nuclear||7.7 cents per kWh||11.4 cents per kWh|
Clearly, the tides have shifted in the energy industry. Fossil fuels is at best flat and in some cases getting more expensive, while renewable energy costs are coming down every year. There’s no indication these trends will reverse course, and investors need to consider whether they’re using renewable energy’s growth as a tailwind for their portfolio or fighting the clear trends in energy. If these charts are any indication, fossil fuels’ days may be numbered.
A total of 210,000 gallons of oil leaked Thursday from the Keystone pipeline in South Dakota, the pipeline’s operator, TransCanada, said.
The Public Service Company of New Mexico is asking for project proposals, including renewables and battery storage, designed to help reach its coal-free goal by 2031.
A joint study by Finland’s Lappeenranta University of Technology and Energy Watch Group presented on the sidelines of the COP23 talks in Bonn demonstrates that a global transition to 100% renewable electricity could be achieved by 2050, and would be more cost effective than the current electricity system.
The study, ‘Global Energy System Based on 100% Renewable Energy – Power Sector’ was presented during the Global Renewable Energy Solutions Showcase event, a sideline to the United Nations Climate Change Conference COP23 currently underway in Bonn.
The study’s key overall finding is that a global shift to 100% renewable electricity is feasible with current technology, and would be more cost effective than the current system led by fossil fuels and nuclear generation.
The study found that in a projected scenario for energy demand in 2050, 100% could be met by current renewable technologies, at a global average LCOE of €52/MWh, compared with 2015’s average LCOE of €70.
In EWG’s 2050 scenario, solar PV covers 69% of electricity demand, wind 18%, hydro 8% and bioenergy 2%. The study predicts that wind will briefly overtake solar in the 2020s, before further price drops put solar back in the lead.
Storage is outlined as the key supporting technology for solar, with around 31% of total demand covered by storage technologies. 95% of this is projected to come from short term storage provided by batteries, with power to gas conversion providing seasonal storage.
“There is no reason to invest one more dollar in fossil or nuclear power production,” exclaims EWG President Hans Josef. “All plans for a further expansion of coal, nuclear, gas and oil have to be ceased. More investments need to be channeled in renewable energies and the necessary infrastructure for storage and grids. Everything else will lead to unnecessary costs and increasing global warming.”
The report is based on an original model developed by Lappeenranta University of Technology, which calculates the most cost-effective mix of technologies based on available resources in 145 regions for a full reference year. The full study is published here.
Only time will tell whether this study’s recommendation will translate into reality. As lead author Christian Breyer sums up: “Energy transition is no longer a question of technical feasibility or economic viability, but of political will.”
BRIDGETOWN, Barbados (CMC) — The Barbados government says independent power producers interested in supplying electricity to the national grid will be able to apply for licences by early next year. Energy Minister Darcy Boyce said that recommendations on licensing systems for these producers should be in hand by the end of the year and that proposals for pricing of renewable energy would also go before the Fair Trading Commission early next year.
“We can give certainty to investors of what they will earn,” he said, adding that the recommendations on pricing will be made after stakeholder consultations.
Boyce was speaking at a signing ceremony between the Division of Energy and Enermax Limited to facilitate the installation of solar photovoltaic systems at 28 community centres and nine polyclinics.
The project, which will be implemented over the next three months, forms part of the Disaster Risk and Energy Access Management (DREAM) Project funded by the Global Environmental Facility (GEF) with project support from the United Nations Development Programme (UNDP).
Its primary objectives are to reduce greenhouse gas emissions through the use of renewable energy and to strengthen Barbados’ disaster risk response by promoting decentralised photovoltaic electricity generation with battery back-up.
Boyce said that eventually he would like to see all community centres, polyclinics, the Queen Elizabeth Hospital and all schools with renewable energy systems.
He said this would result in a reduction in electricity costs, provide critical battery support when there were outages and ensure that communities and schools were not impacted in carrying out their programmes because of high electricity bills.
Prime Minister Andrew Holness says Jamaica must capitalise on the availability of renewable energy. He explained that the country would be in a far better position if it could convert naturally occurring forces into energy.
“It is possible for Jamaica to go to approximately 50 per cent of its energy needs provided by alternatives,” Holness declared during a tour of BMR Jamaica Wind Limited in Potsdam, St Elizabeth, on Wednesday.
BMR Jamaica Wind Limited is the builder, owner and operator of Jamaica’s largest privately funded renewable energy project. The 36.3MW wind-generating facility has been in operation since July 1, 2016. At a cost of US$89.9 million, this represents a major investment in the parish of St Elizabeth.
“From a policy perspective, we would much prefer to have more of our energy locally generated, and from that perspective, renewables are very important to us,” said Holness.
He pointed out that there is great potential between the parishes of Manchester and St Elizabeth for an expansion in wind-generating plants and that the significant investment made by BMR Limited is an indication that there can be even greater investment in wind energy in Jamaica.
Meanwhile, the Prime Minister said that the Government is doing an integrated resource plan which will project what are the country’s future needs. In addition, the plan will incorporate how the country can supply those future needs integrating renewables, in particular wind and solar.
“Of course, the problem with renewables is the intermittency of the supply, and even that can be overcome with battery technology, which has increased and improved, and so I hold a very optimistic view of the future of energy supply in Jamaica. We are now looking at expansion in solar,” added the Prime Minister.
According to Holness, another solar plant will be opened very soon and the Government is also examining waste energy as a solution.
The BMR Jamaica Wind project holds the distinction of being the first project funded in Jamaica by the Overseas Private Investment Company (OPIC). US$62.7 million was provided by OPIC and US$20 million from the International Finance Company (IFC).
The project is the recipient of the OPIC impact award 2016, as well as, the CREF Wind Project of the Year 2017.
Bonn, Germany, 10 Nov 2017 – Leaders from a wide range of sectors came together on Friday at Energy Day at the UN Climate Change Conference in Bonn to announce a new set of initiatives to transition to renewable energy and to show that more ambitious clean energy development can quickly become a bigger part of national climate plans submitted under the Paris Climate Change Agreement.
“With the price of renewable and storage technologies tumbling, and greater understanding on how to set the policy table for a cleaner energy mix and more integrated energy planning, the question before decision makers is, why wait?” said Rachel Kyte, Special Representative of the UN Secretary-General and CEO, Sustainable Energy for All.
Success stories, action and new commitments shared during Energy Day at the COP23 UN Climate Change Conference from businesses, states, cities and forward-thinking countries continue to show ambition to ensure the clean energy transition is not only underway but is irreversible.
“Our pledge to leave no one behind is a critical component of the Paris Agreement. The energy transition that we can see is underway and must be a transition towards energy systems around the world that secure sustainable energy for all,” said Ms Kyte.
“This means placing energy efficiency first, adopting a laser like focus on ending energy poverty and using the renewable energy revolution to achieve universal access and a bending of the emissions curve. With each year, each COP, the health and economic impacts of carbon pollution are better documented and the science of what awaits us, if we continue on our current path, mounts,” she said.
Adnan Z. Amin, International Renewable Energy Agency (IRENA) Director-General said: “Two-thirds of global greenhouse gas emissions stem from energy production and use, which puts the energy sector front and centre of global efforts to combat climate change. Our analysis shows that renewables and energy efficiency can together provide over 90 per cent of the mitigation needed in the energy system by 2050 to achieve the ambitions of the Paris Agreement, while also boosting the economy, creating jobs and improving human health and well-being.”
“We have a large, untapped, and affordable renewable energy potential waiting to be developed. Revising the Nationally Determined Contributions (NDCs) gives countries an opportunity to take a fresh look at how to harvest this potential, not only for mitigation, but in light of the multiple socio-economic benefits of renewables, also for adaptation,” said Mr Amin.
Fatih Birol, International Energy Agency (IEA) Executive Director, said: “The transition of the energy sector in the next decades will be critical to meeting shared climate and sustainable development goals. Widespread action by governments and private sector alike has helped keep global energy-related emissions flat the last three years. Our analysis shows we can meet climate goals while achieving energy access and improving the environment.”
The central goal of the Paris Agreement is to keep the average global temperature rise well below 2 degrees Celsius and as close as possible to 1.5 degrees. About one degree of that rise has already happened, underlining the urgency to progress much further and faster with the global clean energy transformation.
Energy Day is organized by The Climate Group, IEA, IRENA and Sustainable Energy for All (SEforALL) as part of a series of thematic action days held under the auspices of the Marrakech Partnership.
The global community has coalesced around the ambitious goals of the Paris Agreement, one of which is to peak global greenhouse gas (GHG) emissions as soon as possible. The longer we delay the peak — the point when global emissions switch from increasing to decreasing — the more difficult it will be to limit global warming. Yet global GHG emissions are still rising and are expected to continue to climb through 2030.
The timing of when individual countries’ emissions peak and then decline — especially those of major emitters like the United States and China — is critically important in determining whether we can avoid the most dangerous climate impacts.
Although the timing of when global GHG emissions need to peak is well documented, there has been less research on when individual countries’ emissions have peaked. World Resources Institute’s (WRI) new paper, Turning Points: Trends in Countries Reaching Peak Greenhouse Gas Emissions Over Tim e, fills this gap by analysing which countries’ emissions peaked in the past and which countries have emissions- reduction commitments that imply peaking in the future.
The paper documents steady progress in the number of countries reaching peak emissions over time. By 1990, 19 countries had peaked (representing 21 per cent of global emissions), and by 2030 this number is likely to grow to 57 countries (representing 60 per cent of global emissions). Among the 57 countries that have peaked already or have a commitment that implies a peak by 2030 are some of the world’s biggest emitters, including China, the United States, Russia, Japan, Brazil, Germany and Mexico.
Peaking Progress by Decade
19 countries, representing 21 per cent of global emissions (based on 1990 emissions data), reached peak emissions in 1990 or earlier. Sixteen of them were former Soviet republics and/or economies in transition. The economic collapse after the break-up of the Soviet Union resulted in several former Soviet republics’ emissions declining sharply. Germany and Norway also peaked by 1990, and the European Union as a whole reached peak emissions by 1990.
By 2000, 33 countries’ emissions peaked, representing 18 per cent of global emissions (based on 2000 emissions data). Many of the countries peaking in the 1990s were European nations such as the United Kingdom, France, the Netherlands, Belgium, Denmark, Sweden, Switzerland and Finland. Costa Rica also reached peak emissions levels in 1999.
The number of countries that peaked by 2010 grew to 49, representing 36 per cent of global emissions (based on 2010 emissions data). This includes several more European countries such as Austria, Iceland, Ireland, Spain and Portugal, as well as Brazil (which peaked in 2004), Australia (which peaked in 2006), and the United States and Canada (both of which peaked in 2007).
53 countries representing 40 per cent of global emissions (based on 2010 emissions data rather than 2020 projections) peaked or have a commitment to peak by 2020. Countries with commitments to peak as part of their Copenhagen Accord pledges for 2020 include Japan, the Republic of Korea, Malta, and New Zealand. By 2020, almost all developed countries are expected to have peaked. 42 of the 43 Annex I countries under the United Nations Framework Convention on Climate Change are expected to peak — all except for Turkey.
China, the Marshall Islands, Mexico and Singapore have unconditional climate pledges under the Paris Agreement that imply a peak in emissions by 2030 (China’s commitment is for CO2 emissions only). This brings the number of countries that have peaked or have a commitment to peak by 2030 to 57, representing 60 per cent of global emissions (based on 2010 emissions data rather than 2030 projections).
To be conservative, our analysis only considers countries with unconditional targets as having a target that implies a future peak. Additional countries that have targets that imply an emissions peak by 2030 but are contingent on receiving international support include Bhutan, Botswana, Ethiopia, Grenada and South Africa. The inclusion of these countries would increase the per cent of global emissions covered by peaking countries from 60 to 61 per cent in 2030.
Accelerating Climate Commitments
While this trend is encouraging, it’s not enough. Research suggests that to have a likely chance of staying within the 2°C limit for the least cost, global GHG emissions need to peak by 2020 at the latest. The world’s ability to limit warming to 1.5 or 2˚C depends not only on the number of countries that have peaked over time, but also the global share of emissions represented by those countries; their emissions levels at peaking; the timing of peaking; and the rate of emissions reductions after peaking.
Countries must make and achieve commitments to peak their emissions as soon as possible, set their peaks at lower emissions levels, and commit to a significant rate of emissions decline after peaking.
Countries can make these commitments when communicating or updating their nationally determined contributions under the Paris Agreement in 2020. Doing so will help ensure that countries’ emission reduction commitments bring global emissions to the level needed to meet the Paris Agreement’s temperature goals, and avoid the most dangerous impacts of climate change.