Wind & solar now cheapest electricity almost everywhere

Source: BNEF

From BNEF:

Solar PV and onshore wind are now the cheapest sources of new-build generation for at least two-thirds of the global population. Those two-thirds live in locations that comprise 71% of gross domestic product and 85% of energy generation. Battery storage is now the cheapest new-build technology for peaking purposes (up to two-hours of discharge duration) in gas-importing regions, like Europe, China or Japan.

The latest analysis by research company BloombergNEF (BNEF) shows that the global benchmark levelized cost of electricity,[1] or LCOE, for onshore wind and utility-scale PV,[2] has fallen 9% and 4% since the second half of 2019 – to $44 and $50/MWh, respectively. Meanwhile, the benchmark LCOE for battery storage has tumbled to $150/MWh, about half of what it was two years ago.

Onshore wind has seen its most significant drop in cost since 2015. This is mainly due to a scale-up in turbine size, now averaging 4.1 megawatts, and priced at about $0.7 million per megawatt for recently financed projects. In Brazil for instance, where wind resources are ample, the economic crisis of 2016 onwards saw the cost of capital for wind projects increase by up to 13%. BNEF’s analysis suggest that lending rates more recently have fallen back to levels seen before that crisis. And this means that best-in-class onshore wind projects can achieve an LCOE of $24 per megawatt-hour, the lowest globally. Meanwhile top projects in the U.S., India and Spain follow at $26, $29 and $29 per megawatt-hour respectively, excluding subsidies such as tax-credits.


In China, the largest PV market, our solar benchmark is at $38/MWh, down 9% from the second half of 2019, following a rapid uptake in better performing monocrystalline modules. New-build solar in the country is now almost on par with the running cost of coal-fired power plants, at an average of $35/MWh. This is significant as China advances on its deregulation agenda, opening up competition in the power sector.

Globally, we estimate that some of the cheapest PV projects financed in the last six months will be able to achieve an LCOE of $23-29 per megawatt-hour, assuming competitive returns to their equity investors. Those projects can be found in Australia, China, Chile, and the U.A.E., where they will challenge the existing fleet of fossil fuel power plants.

On current trends, the LCOE of best-in-class solar and wind projects will be pushing below 20 dollars per megawatt-hour this side of 2030. A decade ago, solar generation costs were well above $300, while onshore wind power hovered above $100 per megawatt-hour. Today the best solar projects in Chile, the Middle-East and China, or wind projects in Brazil, the U.S. and India, can achieve less than $30 per megawatt-hour. And there are plenty of innovations in the pipeline that will drive down costs further.

Battery storage is another example of how scale can unlock cost reductions. Today, BNEF estimates that the average capacity of storage projects sits at about 30 megawatt-hours, a fourfold rise compared to just seven megawatt-hours per project four years ago. Since 2018, increasing project sizes combined with a rapidly expanding manufacturing base and more energy dense chemistries, have halved the LCOE of energy storage. BNEF’s global LCOE benchmark sits now at $150/MWh for battery storage systems with a four-hour duration.

China is home to the cheapest storage levelized costs globally, at $115 per megawatt-hour. This competitive advantage hinges mainly on the proximity of developers to the equipment supply chain and the more widespread use of cheaper LFP (lithium iron phosphate) chemistries. In comparison, the levelized cost of open-cycle gas turbines per megawatt-hour sits today between $99 in the U.S. and $235 in Japan, with China at $145.

BNEF’s LCOE analysis is based on information on real projects starting construction, and proprietary pricing information from suppliers. Its database covers nearly 7,000 projects across 25 technologies (including the various types of coal, gas and nuclear generation as well as renewables), situated in 47 countries around the world.

[Read more here.  See also this article of a few days ago, Coal's declining viability]

All this is incredibly good news.  We greenies have been arguing for decades that we need to switch to renewables to save our future.  But that's a hard argument to put to poor people, when renewables were much more expensive that coal and gas.  And after all, it did seem that all the negative consequences of global heating were decades away.  But now, renewables are cheaper in most of the world, and it is blatantly obvious that the dire consequences of global heating are happening now, and will only get worse.

China and coal are key to reining in emissions, China because it is so big and coal because it is so polluting, and China uses a lot of it (half the world total.)   So when the operating cost of coal there is about the same as the new-build cost of solar, that is very, very good news.  When the cost of battery-peaking is less than the cost of gas-peaking, as it now is in China, that too is good news.   China is also pushing EVs, to reduce emissions from the transport sector.  This year, Chinese emissions will fall because of the coronavirus crisis.  They will recover next year, but as renewables make up an ever increasing percentage of generation, and EVs of the car fleet, CO₂ emissions in China will start to fall.  Could 2019 be the year Chinese  and world emissions peaked?