"Someday" is Now for Solar and Wind Power, says Lazard

The investment bank says utility-scale wind and solar plants have reached price parity with fossil fueled-generation in many parts of the United States

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"Someday" is Now for Solar and Wind Power, says Lazard
Solar and wind farms in California's Imperial Valley.
Photo: Peter Fairley

Large wind and solar power farms have the economics to go toe-to-toe with the cheapest fossil fuel-based power supplies in the United States according to the venerable financial advisory firm Lazard Ltd. Thanks to falling costs and rising efficiency, reports Lazard in an analysis released this week, utility-scale installations of solar panels and wind turbines now produce power at a cost that's competitive with natural gas and coal-fired generating stations—even without subsidies.  

The results appear in the eighth annual update of Lazard's Levelized Cost of Energy Analysis [pdf], which compares the combined cost of financing, building, and operating power generating plants using a variety of energy technologies. Lazard projects that new utility-scale solar plants will deliver energy at US $72-86 per megawatt-hour, and wind turbines beat that with a cost of $37-81/MWh.

Those renewable energy options compare well against the cost of the most cost-effective natural gas-fired technology—combined cycle plants—which delivers at a projected $61-127/MWh (depending on whether the plant captures its carbon dioxide emissions). The renewables look even better against coal in Lazard's analysis, which prices new coal-fired generation at $66-171/MWh. 

The London-based Financial Times says the message is that renewables are starting to "outshine" gas. The FT quotes George Bilicic, Lazard global head of power, energy & infrastructure, accepting that renewable energy has finally arrived: “We used to say some day solar and wind power would be competitive with conventional generation. Well, now it is some day.”

Lazard is less keen on the present competitiveness of distributed renewables, such as rooftop photovoltaics. It estimates that rooftop PV delivers power at $180/MWh for homes and $126/MWh for businesses due to, for example, the higher cost of rooftop installation and higher transaction costs associated with smaller-scale projects.

However, sophisticated studies show a more nuanced picture. As IEEE Spectrum reported in March 2013, rooftop PV installations are already cost-effective in the U.S. without subsidies in areas with strong sunlight and higher-than-average local power prices. According to the solar parity mapping tool profiled in that article and created by the Minnesota-based Institute for Local Self Reliance, California should have enough of these solar parity niche zones to support the installation of 10,780 MW of residential rooftop PV and 13,910 MW of commercial rooftop PV in 2014. 

That opportunity—if seized—also adds up to a considerable competitive challenge to conventional power plant technology. 

The Conversation (0)
This photograph shows a car with the words “We Drive Solar” on the door, connected to a charging station. A windmill can be seen in the background.

The Dutch city of Utrecht is embracing vehicle-to-grid technology, an example of which is shown here—an EV connected to a bidirectional charger. The historic Rijn en Zon windmill provides a fitting background for this scene.

We Drive Solar

Hundreds of charging stations for electric vehicles dot Utrecht’s urban landscape in the Netherlands like little electric mushrooms. Unlike those you may have grown accustomed to seeing, many of these stations don’t just charge electric cars—they can also send power from vehicle batteries to the local utility grid for use by homes and businesses.

Debates over the feasibility and value of such vehicle-to-grid technology go back decades. Those arguments are not yet settled. But big automakers like Volkswagen, Nissan, and Hyundai have moved to produce the kinds of cars that can use such bidirectional chargers—alongside similar vehicle-to-home technology, whereby your car can power your house, say, during a blackout, as promoted by Ford with its new F-150 Lightning. Given the rapid uptake of electric vehicles, many people are thinking hard about how to make the best use of all that rolling battery power.

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