For the second year in a row, wind and solar accounted for roughly two-thirds of new U.S. generating capacity, while natural gas and nuclear made up most of the rest.
That’s because right now, in much of the United States, wind and solar are the cheapest form of power available, according to a new report from investment bank Lazard.
Analysts found that new solar or wind installations are cheaper than a new coal-fired power installation just about everywhere — even without subsidies — while the cost of renewables continues to fall rapidly.
Solar and wind are getting really, really cheap.
Since just last year, the cost of utility-scale solar has dropped 10 percent, and the cost of residential solar dropped a whopping 26 percent — and that is coming after years of price declines. The cost of offshore wind declined by 22 percent since last year, though it still remains more expensive than onshore wind.
The Lazard report is just the latest chapter in the success story of renewable energy. Since 2009, the cost of solar has been cut nearly in half. The cost of wind has fallen by two-thirds. The precipitous drop in price is reminiscent of shrinking costs for personal computers. Wind and, particularly solar, have yet to level off. New technologies and cheaper materials will continue to drive down costs in the years ahead.
The chart below shows the total cost per megawatt-hour of different forms of power. Lazard added up the lifetime cost of parts, fuel, labor, and other expenses and divided by the number of megawatt-hours generated. From this, they produced a range for the levelized cost of energy (LCOE).
This figure does not include energy subsidies nor the cost of environmental impacts. For instance, if a solar panel costs $100 without subsidies and $70 with subsidies, the LCOE would still be $100. On the other hand, if a gas turbine costs $100 without accounting for the social cost of carbon, and $130 after accounting for the social cost of carbon, then the LCOE stays at $100.
(Researchers use different methods to calculate levelized cost. Trump’s transition team, for example, has hinted that it wants to change the way the federal Energy Information Administration calculates the levelized cost of renewables to make wind and solar appear more expensive.)
By and large, wind and solar are going up in locales with an abundance of wind and sunshine. Wind is most cost-effective in the windswept states in the middle of the country — such as Iowa, Oklahoma, Kansas, and Texas. Solar is most cost-effective in the sun-drenched Southwest — states like Nevada, Arizona, and California. Natural gas is still the cheapest option in much of the rest of the country — but keep in mind that the levelized cost does not account for the environmental cost of burning fossil fuels.
Press link for more: Think Progress