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The Business Case for Solar and Wind Remains Elusive

Energy company executives must weigh a number of factors when deciding which generation technologies to invest in. While solar and wind tell a strong renewable story, they cost 60% to two times more than alternatives, according to the US Energy Information Administration. Consequently. the choice becomes a tradeoff of price versus sustainability.

Renewable pricing is falling at higher rates than establish energy sources. From 2017 to 2018, the average construction cost of US solar dropped by 21% to $1,848 per kilowatt (kW). The decrease was driven by falling prices for crystalline silicon fixed-tilt panels.

Wind turbine expenses were lowered by 16% to $1,382 per kW. The largest decreases were at wind farms within the 1 megawatt (MW) to 25 MW range; construction costs for these farms decreased by 22.6% to $1,790 per kW.

In comparison, natural gas expenses fell by just 4% to $858 per kW, but it costs significantly less than solar and wind. So, the choice is difficult for energy executives. While they would like to adopt more sustainable energy sources, the gap between the old and the new is quite large and difficult to justify, especially with today’s volatile, downtrodden global economy.

Discussions

Bob Meinetz's picture
Bob Meinetz on Oct 23, 2020

Paul, I think maybe we should be adding the per-kWh cost of wind and gas together - as a price for wind.

A lineman from Texas recently confirmed what I suspected: "When new solar goes up, the new gas plant is never far behind."

Paul Korzeniowski's picture
Paul Korzeniowski on Oct 25, 2020

Renewables are the long term option but do create a number of challenges in the short term. 

Bob Meinetz's picture
Bob Meinetz on Oct 27, 2020

How can sources of energy that are 100% reliant on gas generation for backup, for supply balancing, for frequency and voltage stabilizaton, be long term options?

David  March's picture
David March on Oct 26, 2020

As someone that built 425 MW of utility scale solar, I believe your quote of $ 1,800  per KW for solar might be a bit misrepresented. I believe you are also including behind the meter rooftop, residential and C&I, which is not a valid comparison to utility scale natural gas generation. Current utility scale solar construction is significantly less than the number you propose. 

John Simonelli's picture
John Simonelli on Oct 27, 2020

The big expenditure may eventually be utility scale storage.  There's probably a break point where you just can't keep adding gas turbines and need to balance that with "big" storage.

Paul Korzeniowski's picture

Thank Paul for the Post!

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