Lazard: Solar, wind close to reaching affordability of existing coal, nuclear

Share on facebook
Share on twitter
Share on linkedin
Share on reddit
Share on email

Solar and wind have seen such major cost-efficiency gains within a single decade they are close to outcompeting already operational coal and nuclear plants, according to Lazard.

On Thursday, the consultancy released new analysis charting the dramatic slide in solar and wind levelised costs of energy (LCOE) between 2009 and 2019, taking both green energy technologies to a point where they make more financial sense than non-renewable incumbents.

Unsubsidised utility-scale solar LCOEs have, the figures show, plummeted between 2009 (US$323-394) and 2019 (US$36-44). For unsubsidised wind, LCOE improvements have been similarly decisive, taking the industry from US$101-169 in 2019 to US$28-54 in 2019.

According to Lazard, green energy cost-efficiency gains may have slowed in recent years, particularly for onshore wind. However, they still have made most new-builds cheaper than their coal, gas and nuclear counterparts, the firm noted, using the following figures to underpin the premise:

LCOE comparison – Unsubsidised analysis (Source: Lazard)

Gas peaking Nuclear Coal Gas combined cycle
US$150-199 US$118-192 US$66-152 US$44-68
Wind Solar PV – Thin-film utility-scale Solar PV – Rooftop C&I Solar PV – Rooftop residential
US$28-54 US$32-42 US$75-154 US$151-242

For solar and wind, Lazard continued, the progress with economics has reached such heights both technologies are also closing in on existing, not just new, non-renewable plants.

Where running existing coal and nuclear plants carries today marginal costs of US$26-41 and US$27-31, building unsubsidised thin-film utility-scale PV and onshore wind instead would carry LCOEs of US$32-42 and US$28-54. If either PV or wind were subsidised, they would effectively already be cheaper, Lazard said.

Cheaper doesn’t cut it if storage is absent

Lazard’s latest update evidences solar’s cost-efficiency momentum reaches across the world.

Whether cheaper systems such as crystalline utility-scale solar or pricier counterparts such as C&I rooftops, PV power now outcompetes gas peakers in the US, Australia, Brazil, India, South Africa and Japan, the firm’s estimations show.

However, Lazard noted, competitiveness is only one piece of the puzzle. “Without storage … these [solar and wind] resources lack the dispatch characteristics, and associated benefits, of such conventional technologies,” the consultancy pointed out.

The necessary alliances with storage systems will be helped along by the fact that economics are too improving for the latter, based on separate analysis by Lazard. Lithium-ion systems in particular have witnessed faster cost drops than alternative storage technologies, the firm said on Thursday.

“Lithium-ion, particularly for shorter duration applications, remains the least expensive of energy storage technologies analyzed and continues to decrease in cost, thanks to improving efficiencies and a maturing supply chain,” Lazard pointed out.

The firm’s LCOS update shows that – as in earlier years – cost gaps remain apparent across segments. For instance, front-of-meter LCOS differ between standalone wholesale (US$165-US$325) and solar-plus-storage wholesale (US$102-139).

The economical soundness of solar-plus-storage extends to the behind-the-meter segment, with hybrid C&I systems (US$223-384) outcompeting their standalone peers (US$485-1,042). As Lazard noted, residential hybrids face a more uphill climb, with LCOS in the US$457-663 range.

See here to browse Lazard's Levelized Cost of Energy Analysis (LCOE 13.0) and Levelized Cost of Storage Analysis (LCOS 5.0) in full

The prospects and challenges of solar's new era in Europe and beyond will take centre stage at Solar Media's Solar Finance & Investment Europe (London, 5-6 February) and Large Scale Solar Europe 2020 (Lisbon, on 31 March-1 April 2020).

20 October 2021
Utility-scale solar is evolving, shaped by higher power modules and demand for increasingly lower levelised cost of electricity (LCOE). Those trends are also changing project requirements elsewhere, with inverters capable of delivering high power density and power capacity in strong demand. In this webinar, FIMER will detail how its innovative high-power, multi-MPPT string inverter and modular conversion solution can both meet those demands and transform the utility-scale solar sector for the better.

Read Next

September 17, 2021
US utility company Dominion Energy Virginia has proposed 15 new energy projects totalling 1GW of power for the state, which Dominion Energy claimed was the largest group of projects to be submitted to the Virginia State Corporation Commission (SCC)
PV Tech Premium
September 16, 2021
Spencer Jansen, head of new technology solutions at developers Hive Energy and Ethical Power, assesses how the introduction of large-format solar modules has had repercussions throughout the solar design and procurement process.
PV Tech Premium
September 15, 2021
Record-breaking power prices across Europe have turned the spotlight on the role fossil fuel plants play in generating electricity and how the transition to renewables-plus-storage could lower consumer bills.
September 14, 2021
The Senate of Illinois has passed legislation that will commit the US state to reaching 50% renewables by 2040 and 100% carbon-free electricity by 2045.
September 13, 2021
The Indian state of Tamil Nadu is planning to develop 4GW of additional solar projects as well as new battery energy storage systems, according to local media.
September 13, 2021
The Australian Renewable Energy Agency (ARENA) will support projects that further lower the cost of renewable generation as part of a new investment strategy aimed at underpinning the transition to net zero emissions.

Subscribe to Newsletter

Upcoming Events

Solar Media Events
October 6, 2021
Solar Media Events
October 19, 2021
Solar Media Events
December 1, 2021