BNEF's renewables costs

The chart below shows the average global costs over time for different renewable generation technologies.   Offshore wind is more expensive than onshore, for obvious reasons, but has the advantage that winds are more reliable on water than they are on land.  Interestingly, tracking solar, where the solar panel rotates during the course of the day to face the direction of the sun, which you'd expect to be more expensive than fixed solar, is not.  The extra yield from a "squarer" insolation profile more than compensates for the extra expense of motors to rotate the panels.  Tracking solar is also better than fixed-tilt solar because output jumps to its maximum just after sunrise and lasts until just before sunset, which means output is better attuned to the daily demand profile, especially the morning peak.

So the cheapest global electricity comes from single-axis tracking solar, then onshore wind, then fixed solar, then offshore wind.  The green line shows a simple average of all four types, and you can see how it has fallen steadily over the last 12 years, falling from $256/MWh in H2 2009 to $52/MWh in H1 2021, or by 80%.  The recent uptick in LCOEs is driven by a three-fold jump in polysilicate prices (for solar) and a doubling of steel prices (for wind).   These are both cyclical, and will partly unwind as economic growth slows after the post-pandemic rebound.  The jump in polysilicate prices is particularly interesting, hinting at a massive build out of solar in China and globally.

Just like Lazard (whose data I have been using for a few years now) and IRENA, BNEF shows the same strong downward trends in the cost of renewables.   Lazard estimate the average cost of new coal at $112/MWh in the US, and the marginal/operating cost of coal at $41/MWh, though that will have risen this year because of the jump in the coal price.  This compares with the average for  onshore wind, and tracking solar of $40/MWh.   Lazard's calculation for the marginal cost of gas in the US is $28/MWh, but gas in the US is less than  half the price of gas outside the US.  For example, gas in Europe  has reached US$12.51/MBtu compared with $4.40 in the US.  And the US natural gas price is up 70% over the last year.   

The moral of this tale is obvious, but I'll tell you anyway:  coal is finished.  Because output from gas power stations can be ramped up more rapidly than from coal, to match supply shortfalls from renewables, gas is still "safe" for now.  Until battery prices halve again.