Solar Power Is Cheaper, but the World Is Still Running on Fossil Fuels

The Price Of Power

Even without subsidies, new wind and solar power plants are usually cheaper than new coal, nuclear, or natural gas power plants. In fact, they are often not only cheaper, but substantially so. According to Lazard, levelized cost of energy (LCOE) estimates based on averages for the U.S. as a whole show that utility-scale renewables are far less expensive than conventional power sources — even when historical subsidies for conventional power sources, or social costs such as healthcare for coal-related health problems, aren’t taken into account.

Solar is even cheaper outside the U.S.; its costs are dropping faster in India, China, UAE, Saudi Arabia, Australia, and elsewhere. The lowest costs reported by Lazar are far higher than those recorded around the world. However, even Lazard — with its often conservative measures — agrees that in many areas of the U.S., costs of coal and solar power have reached parity. Solar costs — which are connected to technology — are only going to drop, unlike coal prices.

Data on installed costs of solar confirm it’s at least on par with fossil fuels for the time being, and may well soon be cheaper. By the end of 2015, installed costs of solar power were, on average, less than $50 per megawatt-hour in four out of five regions. They were less than $60 per megawatt-hour in the fifth, which was the Midwest, where prices are expected to be higher due to cold temperatures. In the power industry at that time, the average market price of electricity was $30 to $40 per megawatt-hour. Solar has been dropping steadily ever since, and is therefore poised to match, and ultimately beat, the price of conventional power. Read more…