Cost of Different Electricity Sources

Lazard has been producing this chart for a couple of years now.  Over the last few years, the cost of renewables (shown in the top half of the graphic) has fallen steadily (i.e., moved to the left).  Cleantechnica has added the dotted lines and the coloured arrows to Lazard's original chart.

Click on the chart to enlarge it to a more readable size

(Source)

Wind and solar are clearly the cheapest.  In fact, the most recent contract signed in Dubai is at just 3 cents per kWh ($30 per MWh), as marked by the dashed yellow line.  Dubai is in the desert, latitude 25 degrees, and it has lots of sun. Solar in Australia, the US south-west, Africa, India wouldn't be much more expensive than this.  The cost of solar in northern Europe on the other hand would be higher, but the cost of wind would be lower.

Note also how cheap CSP (concentrated solar power with storage) is.  Dubai has just announced the world's largest and cheapest CSP project, which will deliver power 24/7 for under 8 cents per kWh or $80 per MWh, way below the $119 in the chart.  The only fossil fuel generating process cheaper than that is Gas Combined Cycle.

In addition, the assumption in the costings is for an 8% interest rate.  In the case of solar (PV), CSP and wind there is no fuel cost--virtually all the cost is the upfront cost of capital.  Which means that at a lower interest rate the costs of these technologies would be lower.  Governments right now can borrow at 2%, which would slash the cost of renewables.  I'd be interested to know by how much.

The picture of the structure of the grid is clear: utilities will preference wind and PV to the maximum extent practicable, which for large scale grids (as opposed to smaller areas within and well connected to larger grids) is 50% and  maybe as high as 70%

This will be complemented by gas-fired generation.  Right now burning gas adds to atmospheric CO2.  Michael Liebreich, head and founder of BNEF, talked about power to gas in his keynote presentation to the BNEF annual conference in April.  Audi calls it e-gas. Water is split by electrolysis into hydrogen and oxygen; the hydrogen is passed over a catalyst in a stream of carbon dioxide producing methane, indistinguishable from its natural counterpart. The source of the CO2 stream can be the byproduct of a biomass plant or .... the escape vents of a gas-fired power station, producing in effect a closed system.  (Extracting CO2 from the atmosphere is feasible but expensive.)  And most developed countries have an existing natural gas grid with extensive storage.

This kind of mix is exactly what the US is installing now.   Cheap solar, cheap wind, and gas to fill the gaps.  And potentially, the gas can be produced from surplus wind and solar.  I haven't mentioned batteries, or extending the grid, both of which are additional options to allow higher percentages of renewables in the total.

Only inertia, ignorance and the bizarre opposition of the Right is stopping us from rapidly switching to 100% renewable electricity generation.