"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

2 min read
"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)

Smokey the AI

Smart image analysis algorithms, fed by cameras carried by drones and ground vehicles, can help power companies prevent forest fires

7 min read
Smokey the AI

The 2021 Dixie Fire in northern California is suspected of being caused by Pacific Gas & Electric's equipment. The fire is the second-largest in California history.

Robyn Beck/AFP/Getty Images

The 2020 fire season in the United States was the worst in at least 70 years, with some 4 million hectares burned on the west coast alone. These West Coast fires killed at least 37 people, destroyed hundreds of structures, caused nearly US $20 billion in damage, and filled the air with smoke that threatened the health of millions of people. And this was on top of a 2018 fire season that burned more than 700,000 hectares of land in California, and a 2019-to-2020 wildfire season in Australia that torched nearly 18 million hectares.

While some of these fires started from human carelessness—or arson—far too many were sparked and spread by the electrical power infrastructure and power lines. The California Department of Forestry and Fire Protection (Cal Fire) calculates that nearly 100,000 burned hectares of those 2018 California fires were the fault of the electric power infrastructure, including the devastating Camp Fire, which wiped out most of the town of Paradise. And in July of this year, Pacific Gas & Electric indicated that blown fuses on one of its utility poles may have sparked the Dixie Fire, which burned nearly 400,000 hectares.

Until these recent disasters, most people, even those living in vulnerable areas, didn't give much thought to the fire risk from the electrical infrastructure. Power companies trim trees and inspect lines on a regular—if not particularly frequent—basis.

However, the frequency of these inspections has changed little over the years, even though climate change is causing drier and hotter weather conditions that lead up to more intense wildfires. In addition, many key electrical components are beyond their shelf lives, including insulators, transformers, arrestors, and splices that are more than 40 years old. Many transmission towers, most built for a 40-year lifespan, are entering their final decade.

Keep Reading ↓ Show less