Utility Management Group
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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.
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