Wednesday, January 17, 2018

Real Cost of Solar and Wind Power Still Falling

Last year XCel Energy put out a request for bids on new electric power generation in Colorado, and their summary of the bids was recently released. This is actual bids from power generation firms, not some analyst's projections, all to be online by 2023. In total XCel received 350 bids, so there is a lot of interest in building these plants.

The cost of electricity from existing coal plants in the US is around $40 per MWH. The average bids received by XCel for renewable power were as follows:

  Wind:                                          $18.10/MWH
  Wind plus Battery Storage:    $21.00/MWH
  Solar:                                          $29.50/MWH
  Solar plus Battery Storage:     $36.00/MWH
  Wind/Solar/Battery Storage:  $30.60/MWH

These numbers are significantly lower than bids from just two years ago. It's the added battery storage numbers that are key, because to use a lot of renewable power you need either fossil fuel back-up or lots of storage. The bid sheet doesn't say how much storage these bids include, but at any rate you can now build some substantial amount of battery back-up into a new solar/wind system and still end up with a lower price than you get from an already up-and-running coal plant. This makes it seem that the price of battery storage is falling fast, and that power generation companies are betting that this will continue.

One reason that power generation firms are interested in the solar/wind + battery storage formula is that they can charge a higher price for the more reliable power than they could for straight solar or wind, so there's a case of market incentives aligning with what the people clearly need.

Incidentally the amount of coal burned in the US fell by 2% last year, despite Trump and rising demand for electricity; these analysts calculated that if Kentucky replaced all their coal-fired plants with a combination of natural gas and wind, the average electricity bill would fall by 10%, even including the cost of building all the new plants.

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