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On the economics of wind and solar power — by Lion Hirth
“Many hope that wind and solar power will eventually become economically competitive on large scale, leading the way to a global low-carbon economy. Are these hopes justified?”
November’s COP22 climate summit of Marrakech gave climate policy fresh tailwind, after the blow of Donald Trump’s election. Even without a strong global treaty, national climate policies are multiplying — at least a certain type of policies. While the policy that economists often recommend — putting a price on greenhouse gas emissions — remains patchy, as a recent World Bank report shows, subsidies for renewable energy are booming: no fewer than 145 countries support renewables today. Germany’s Energiewende is a prominent, but not the only example: Obama’s Clean Power Plan features renewables as a centerpiece of climate policy, India’s National Solar Mission includes a 100 GW solar power target. In addition China is said to be considering a 200 GW target, and Morocco has announced the building of the largest solar power facility on the planet. Nearly half of all newly added electricity generation capacity was based on renewables. In ten countries, wind and sun deliver more than 10% of electricity consumed. These includes Denmark (43%), Portugal (24%) and Spain (23%).
Many hope that wind and solar power will eventually become economically competitive on large scale, leading the way to a global low-carbon economy. Are these hopes justified?
On the cost side, the economics of renewables look impressive. The costs of wind power have dropped significantly. On average, wind now generates electricity at $70–80 per Megawatt-hour (MWh) globally, as reported by the two international think tanks IRENA and IEA. Ten years ago, a roof-top solar array for a single family home cost more than $50,000 — today it sells for less than $14,000. (America’s LBNL and Germany’s Fraunhofer ISE provide more data.) Germany, which receives less solar radiation than southern Canada, now generates solar power at $90 per MWh. The United Arab Emirates have tendered a solar power station for $58 per MWh and recent auctions in Chile, Peru and South Africa have resulted in even lower prices.
In some countries, wind and solar power are now cost-competitive with coal- and natural gas-fired power plants, even when carbon emissions are not priced. However, cost structures are very country-specific, and cost-competitiveness is not universal. Renewables tend to be cheaper where it is windy or sunny, where investors have access to low-cost finance, where fossil fuels are pricey, and where emissions are priced. In many places, however, coal-fired power plants remain the cheapest option for producing electricity, driving the renaissance of coal. Still, for renewables to have caught up with fossil plants in cost terms represents a huge success for wind and solar power.
Costs are, however, only one side of the competitiveness equation. The other is value. Merely comparing electricity generation costs between different plant types is misleading, as it ignores the fact that the economic value of electricity from different power stations is not the same. This is because on wholesale markets the price of electricity fluctuates from hour to hour (or even minute to minute). Some power plants produce electricity disproportionately at times of high prices (so called “peaking” plants), while others produce constantly at low prices (“base load” plants). This little detail has striking consequences for the economics of wind and solar power. Paul Joskow and Michael Grubb observed this a while ago.
On the value side, the outlook for renewables is…
Former U.S. President Jimmy Carter leases a 10-acre site to SolAmerica Energy for the next 25 years to harvest the power of the Sun
Atlanta-based SolAmerica Energy, a leading solar, development and construction firm, launches a 1.3MW solar array on President Carter’s farm in Plains, Georgia.
Former President Jimmy Carter leased a 10-acre site in his hometown to SolAmerica for development of the 1.3 MW solar project, which will provide over 50% of the power needs of the City of Plains.
Carter, an early advocate and leader of the renewable energy movement during his tenure in the White House, commented;
“Rosalynn and I are very pleased to be part of SolAmerica’s exciting solar project in Plains. Distributed, clean energy generation is critical to meeting growing energy needs around the world while fighting the effects of climate change. I am encouraged by the tremendous progress that solar and other clean energy solutions have made in recent years and expect those trends to continue.” — former U.S. President Jimmy Carter
President Carter created the Department of Energy and the Federal Energy Regulatory Commission (FERC), and signed the Public Utility Regulatory Act (PURPA), which became catalysts for the advancement of renewable energy in the United States. Carter was also the first president to put solar panels on the White House.
“We are honored to work with President Carter and his family on this project in Plains, as President Carter’s leadership on renewable energy matters is well known and much appreciated in our industry.
Through a 25-year Power Purchase Agreement with Georgia Power, this project will help expand the growth of renewable energy assets in Georgia, while contributing to the overall economy of Plains.”
“There remains a great deal of untapped potential in renewable energy in Georgia and elsewhere in the U.S. We believe distributed solar projects like the Plains project will play a big role in fueling the energy needs of generations to come.” — SolAmerica executive vice president George Mori
SolAmerica developed, engineered and installed the single-axis tracker solar array on Carter’s property. Over the next 25 years, the system is projected to generate over 55 million kilowatt hours of clean energy in Plains.
To contact SolAmerica to find out how they can help your farm, commercial, or residential property to save money on electricity costs and help you to become more energy independent, visit: SolAmericaenergy.com
Stellar Homes Group First in South Florida to Include Solar Panel System in New Homes
FORT LAUDERDALE, Fla., May 25, 2016 /PRNewswire/ — To Fort Lauderdale-based Stellar Homes Group, solar power is not a luxury amenity; instead the homebuilder will be the first in South Florida’s history to include a Photo Voltaic (PV) solar panel system, with a 30 year warranty, as a standard feature in all its new homes.
“Our 5Kw PV solar panel package, combined with Stellar Homes Group’s additional energy conservation features, is expected to result in an estimated energy cost savings of approximately $81,000 over 20 years…”
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