I always look forward to the new, annual update of Lazard’s “Levelized Cost of Energy” (LCOE) analysis, and this year’s edition doesn’t disappoint. See below for three key graphics from the report, which finds that:
- “As the cost of renewable energy continues to decline, certain technologies (e.g., onshore wind and utility-scale solar), which became cost-competitive with conventional generation several years ago on a new-build basis, continue to maintain competitiveness with the marginal cost of existing conventional generation technologies.”
- The LCOE of utility-scale solar power has decreased by 89% since 2009, from $323-$394 per megawatt-hour in 2009 to just $36-$44 per megawatt-hour today.
- The LCOE of onshore wind power has decreased by 70% since 2009, from $101-$169 per megawatt-hour in 2009 to just $28-$54 per megawatt-hour today.
- The LCOE of offshore wind power is now around $89 per megawatthour.
- For comparison purposes, “Gas Peaking” power plants are now at $150-$199 per megawatt-hour, which obviously is much higher than utility-scale solar, onshore wind or offshore wind. Same thing for nuclear power, which clocks in at $118-$192 per megawatt-hour – also very expensive. As for coal power, it’s at $66-$152 per megawatthour, which makes it not just dirty, but also more expensive than utility-scale solar, onshore wind, and even offshore wind in many cases. Finally, gas “combined-cycle” power plants are at $44-$68 per megawatt-hour, which is more expensive than utility-scale solar or onshore wind power.
- The bottom line is that, strictly based on “Levelized Cost” considerations, it basically makes no sense to build new fossil fuel-fired power plants, or nuclear power plants for that matter. Instead, the choice on economic grounds alone – not even getting into the fact that thousands of scientists just warned that we are facing a “climate emergency,” and that we need to take major steps like “leaving fossil fuels in the ground” – increasingly should be wind and solar power, not to mention energy efficiency, which is the cheapest form of energy – the power you never have to produce in the first place. That, in turn, means that new fracked-gas pipelines make no sense today, and will make less sense with every year that goes by, until the assets are completely “stranded,” meaning they are effectively worthless. Why on earth would anyone spend billions of dollars on such a dumb investment? And why would Virginia legislators allow a state-“regulated” utility like Dominion do so? This is something that definitely needs to change once Democrats take charge of the House of Delegates and State Senate in January 2020!