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U.S. Fossil Fuels Losing to Wind and Solar Power

by Giles Parkinson.

Wind turbines
Fossil Fuels, Coal, Oil, and Natural Gas, are losing the electrical generation battle to Solar and Wind Power.

Originally published on RenewEconomy

The price of new power purchase agreements for wind farms and new solar projects in the US continue to defy all expectations, making some energy experts wonder why anyone would contemplate a new fossil-fuel plant.

A new report by UBS analysts in the US has crossed our desk. It is basically a write-up from a webinar hosted by UBS and Declan Flanagan, head of local renewable energy group Lincoln Energy, but  it provides some fascinating insight of what is happening in that market.

The first notable conclusion is the declining cost of wind energy. Contracts in Texas, which accounts for around one quarter of all US installations, are regularly below $30/MWH, and some are at $25/MWh. Even with a tax incentive, this still put wind well below $50/MWh.

Why is this happening? New equipment is lifting capacity factors by 5 percentage points, and Texas’ excellent wind conditions mean that wind farms are getting capacity factors in the high 40s or low 50’s (per cent). Nearly half of this occurs during peak load, defying most characterizations of wind as essentially an off-peak power source.

What does this mean? Greentech Media recently quoted Stephen Byrd, Morgan Stanley’s Head of North American Equity Research for Power & Utilities and Clean Energy, speaking at the Columbia Energy Symposium in late November.

“Compare that to the variable cost of a gas plant at $30 per megawatt-hour. The all-in cost to justify the construction of a new gas plant would be above $60 per megawatt-hour.” So who would build gas?

Not as many people. Citigroup recently reported that some peaking gas plants were already being replaced by solar PV plants.

Why is this so? The UBS research note says that in Colorado, local utility Xcl has just announced new contracts for solar PV plants below 6c/kWh ($60/MWh). This, UBS said, was the lowest reported solar pricing it had seen in the US, although it confirms a recent survey by the National renewable Energy Laboratory, which found pricing in that range and with no inflation kicker, meaning that the solar plants would be producing for an effective $40/MWh by the end of their contracts.

That would match even depreciated fossil fuel plants. The variable costs of gas fired plants are likely to be at least $30/MWh, and that does not include their capital costs.

This article, US Fossil Fuels Losing Out To Wind And Solar, is syndicated from Clean Technica and is posted here with permission.

About the Author

Giles ParkinsonGiles Parkinson is the founding editor of RenewEconomy.com.au, an Australian-based website that provides news and analysis on cleantech, carbon, and climate issues. Giles is based in Sydney and is watching the (slow, but quickening) transformation of Australia’s energy grid with great interest.

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Planetary Energy Graphic

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U.S. Energy Subsidies

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U.S. Jobs by Energy Type

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Energy Water Useage

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U.S. Energy Rates by State

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Our energy comes from many sources, including coal, natural gas, nuclear and renewables.

As nonrenewable sources such as coal diminish due to market forces and consumer preference, the need for renewable energy sources grows.

Some U.S. states satisfy their growing renewable energy needs with wind, solar and hydropower.

Wind: Texas has the capacity to generate 18,500 megawatts hours of electricity through wind, and expects to add another 5,000 megawatts of wind generation capacity from facilities under construction.

Solar: California’s solar farms and small-scale solar power systems have 14,000 megawatts of solar power generating capacity.

Hydroelectric: Washington state hydroelectric power produces two-thirds of its net electricity.

Information courtesy of ChooseEnergy.com

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C40 Cities Initiative

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A Living Wage

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