Wind, solar power will continue to gain market share- analysis of levelized cost of energy

Levelized cost of energy survey shows wind, natural gas cementing economic edge SNL, 06 January 2017 By Lucas Bifera

A survey of levelized cost of energy, or LCOE, studies illustrates that onshore wind and combined-cycle gas have secured their place as the lowest-cost energy resources, with utility-scale solar not far behind.

Often used as a barometer for estimating the cost at which certain generation technologies can be deployed on an economic basis, LCOE has become a mainstay for policymakers, analysts and industry groups as a reference when comparing costs and benefits of various technologies on the grid.

Incumbent technologies like combined-cycle gas, onshore wind, utility-scale solar photovoltaic, nuclear and coal are uniformly included in studies…….the emergence of a cluster around onshore wind and combined-cycle gas across the different studies indicates an economic consensus, one that highlights the cost effectiveness of renewables on an unsubsidized basis and role of combined-cycle gas as the preeminent baseload resource.

“The demands of a developed economy will continue to require both traditional and alternative energy sources as the technologies driving renewable energy evolve,” observed George Bilicic, vice chairman and global head of power, energy & infrastructure group at Lazard, an investment bank that releases a widely-cited LCOE study each year.

But on an unsubsidized basis, renewables remain competitive across all studies, and in the case of the Bloomberg New Energy Finance analysis, wind resources in Texas have become the cheapest source of power across North and South America, consistent with Lazard’s finding that wind has a low end range of $32/MWh in the Midwest and $36/MWh in Texas.

“Wind capital costs will go up because they are building higher towers, but LCOE values will fall because they have better capacity factors,” said Josh Rhodes, postdoctoral fellow at the Webber Energy Group and co-author of a study from The University of Texas at Austin’s Energy Institute.

“I think we will see a major deployment of solar and wind to come online by [the end of] 2019 in order to take advantage of the full ITC and PTC,” Rhodes noted, looking outward.

Onshore wind and utility-scale solar additions appear poised to outstrip additions of natural-gas fired ……… the Energy Information Administration’s recent 2017 Annual Energy Outlook, which projects that between 2018 and 2022, as much as 54.2 GW of wind could come online, in addition to 13.4 GW of solar photovoltaic capacity.

Combined, that projected capacity is more than 40 times the amount of projected advanced natural gas-fired capacity projected in the same study, which EIA estimates at 1.6 GW.

“Our analysis suggests that solar could now infringe on gas’ market share and in some cases challenge its peak margins, and that gas and renewables collectively will continue to gain market share at the expense of coal and nuclear,” Guggenheim added. http://www.snl.com/web/client?auth=inherit&mkt_tok=eyJpIjoiWlRsaU0yUXhZMkV3TnpjNCIsInQiOiJGZnRMT045UWllTkRYNzZsSDE1YWFJMXE0M0lQU2F1QnN6Z25jM2hoZlFpNDhwNFFSRzIyTnI1cDdyUW14c2hKXC9keStFV2JvenljcVVFT2Ztc3gxck12WElPXC9WMGVlQWNMbjNJcklpalltM01OTUN2ckRsQktyWlFLTFRcL0VrVyJ9#news/ar