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Solar and Wind Start to Win on Price vs Other Fuels

Discussion in 'BBS Hangout: Debate & Discussion' started by rocketsjudoka, Nov 24, 2014.

  1. rocketsjudoka

    rocketsjudoka Contributing Member
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    Good news on the power generation front.

    http://mobile.nytimes.com/2014/11/2...rice-vs-conventional-fuels.html?referrer&_r=0

    Solar and Wind Energy Start to Win on Price vs. Conventional Fuels

    For the solar and wind industries in the United States, it has been a long-held dream: to produce energy at a cost equal to conventional sources like coal and natural gas.

    That day appears to be dawning.

    The cost of providing electricity from wind and solar power plants has plummeted over the last five years, so much so that in some markets renewable generation is now cheaper than coal or natural gas.

    Utility executives say the trend has accelerated this year, with several companies signing contracts, known as power purchase agreements, for solar or wind at prices below that of natural gas, especially in the Great Plains and Southwest, where wind and sunlight are abundant.

    Those prices were made possible by generous subsidies that could soon diminish or expire, but recent analyses show that even without those subsidies, alternative energies can often compete with traditional sources.

    In Texas, Austin Energy signed a deal this spring for 20 years of output from a solar farm at less than 5 cents a kilowatt-hour. In September, the Grand River Dam Authority in Oklahoma announced its approval of a new agreement to buy power from a new wind farm expected to be completed next year. Grand River estimated the deal would save its customers roughly $50 million from the project.

    And, also in Oklahoma, American Electric Power ended up tripling the amount of wind power it had originally sought after seeing how low the bids came in last year.

    “Wind was on sale — it was a Blue Light Special,” said Jay Godfrey, managing director of renewable energy for the company. He noted that Oklahoma, unlike many states, did not require utilities to buy power from renewable sources.

    “We were doing it because it made sense for our ratepayers,” he said.

    According to a study by the investment banking firm Lazard, the cost of utility-scale solar energy is as low as 5.6 cents a kilowatt-hour, and wind is as low as 1.4 cents. In comparison, natural gas comes at 6.1 cents a kilowatt-hour on the low end and coal at 6.6 cents. Without subsidies, the firm’s analysis shows, solar costs about 7.2 cents a kilowatt-hour at the low end, with wind at 3.7 cents.

    “It is really quite notable, when compared to where we were just five years ago, to see the decline in the cost of these technologies,” said Jonathan Mir, a managing director at Lazard, which has been comparing the economics of power generation technologies since 2008.

    Mr. Mir noted there were hidden costs that needed to be taken into account for both renewable energy and fossil fuels. Solar and wind farms, for example, produce power intermittently — when the sun is shining or the wind is blowing — and that requires utilities to have power available on call from other sources that can respond to fluctuations in demand. Alternately, conventional power sources produce pollution, like carbon emissions, which face increasing restrictions and costs.

    But in a straight comparison of the costs of generating power, Mr. Mir said that the amount solar and wind developers needed to earn from each kilowatt-hour they sell from new projects was often “essentially competitive with what would otherwise be had from newly constructed conventional generation.”

    Experts and executives caution that the low prices do not mean wind and solar farms can replace conventional power plants anytime soon.

    “You can’t dispatch it when you want to,” said Khalil Shalabi, vice president for energy market operations and resource planning at Austin Energy, which is why the utility, like others, still sees value in combined-cycle gas plants, even though they may cost more. Nonetheless, he said, executives were surprised to see how far solar prices had fallen. “Renewables had two issues: One, they were too expensive, and they weren’t dispatchable. They’re not too expensive anymore.”

    According to the Solar Energy Industries Association, the main trade group, the price of electricity sold to utilities under long-term contracts from large-scale solar projects has fallen by more than 70 percent since 2008, especially in the Southwest.

    The average upfront price to install standard utility-scale projects dropped by more than a third since 2009, with higher levels of production.

    The price drop extends to homeowners and small businesses as well; last year, the prices for residential and commercial projects fell by roughly 12 to 15 percent from the year before.

    The wind industry largely tells the same story, with prices dropping by more than half in recent years. Emily Williams, manager of industry data and analytics at the American Wind Energy Association, a trade group, said that in 2013 utilities signed “a record number of power purchase agreements and what ended up being historically low prices.”

    Especially in the interior region of the country, from North Dakota down to Texas, where wind energy is particularly robust, utilities were able to lock in long contracts at 2.1 cents a kilowatt-hour, on average, she said. That is down from prices closer to 5 cents five years ago.

    “We’re finding that in certain regions with certain wind projects that these are competing or coming in below the cost of even existing generation sources,” she said.

    Both industries have managed to bring down costs through a combination of new technologies and approaches to financing and operations. Still, the industries are not ready to give up on their government supports just yet.

    Already, solar executives are looking to extend a 30 percent federal tax credit that is set to fall to 10 percent at the end of 2016. Wind professionals are seeking renewal of a production tax credit that Congress has allowed to lapse and then reinstated several times over the last few decades.

    Senator Ron Wyden, the Oregon Democrat, who for now leads the Finance Committee, held a hearing in September over the issue, hoping to push a process to make the tax treatment of all energy forms more consistent.

    “Congress has developed a familiar pattern of passing temporary extensions of those incentives, shaking hands and heading home,” he said at the hearing. “But short-term extensions cannot put renewables on the same footing as the other energy sources in America’s competitive marketplace.”

    Where that effort will go now is anybody’s guess, though, with Republicans in control of both houses starting in January.
     
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  2. JuanValdez

    JuanValdez Contributing Member

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    It's not really new news in the power industry though. Renewables don't have much variable costs when they are installed and available. But, the fact that they aren't always dispatchable is a weakness that isn't easily solved. If the sun doesn't shine, it doesn't shine; and if the wind doesn't blow, it doesn't blow. The quickly improving battery technology will improve things, because we might get to a point where we can store excess renewable energy more cheaply than we can produce it on the spot with conventional. Even so, no matter how green we get, I think we'll need to have some gas-fired plants that will give us power when we need it. They can start up and shut down quickly and mostly burn a lot more cleanly than coal. I think it's inevitable we'll get to a place where we're using mostly renewables with battery storage, backed up by gas-fired plants, while coal and maybe nuclear go by the wayside.
     
  3. Kevooooo

    Kevooooo Member

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    Hasn't the issue really been storing and transferring the energy that made reusable energy so unappealing? From what I've heard, our grid needs serious work. Glad to see this kind of tech is getting cheaper, but unfortunately wind and solar requires far less jobs than oil and gas, definitely an issue.
     
  4. JuanValdez

    JuanValdez Contributing Member

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    There had been an issue with bringing West Texas wind to market, but FPL recently finished a big transmission line to the Dallas market that has made the situation a lot better. Transmission has been an appealing busines the last couple of years and the infrastructure is improving a bit.

    It's also debatable how much infrastrcuture we'll continue to need though. We'll get to a point (we're there already in some markets) where it'll be cheaper for people to put solar panels on their roofs than to be buy power from the grid. People may be a bit afraid to disconnect from the grid entirely, but if many people get rooftop solar panels as their first supply and use the grid for backup, the economics won't really support having all that infrastructure anymore. Utilities are trying to think of ways they can charge solar power owners in a way to keep the system alive -- which would increase the incentive to disconnect from the grid entirely.
     
  5. Kevooooo

    Kevooooo Member

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    This is true, I've heard from many people that have Co-Opt providers, e.g. CoServe in the DFW region, that won't allow consumers to subsidize their energy costs with solar panels.
     
  6. Commodore

    Commodore Contributing Member

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    markets are distorted and prices hidden by regulations/deductions/credits/subsidies

    as in "buy a solar panel and get a $10k tax credit" or some such, so something is purchased that wouldn't be if it cost $10k more (the $10k being a transfer of taxpayer money to the corporation that makes the solar panel)

    or the corporation get subsidies in exchange for charging the end user less, so again, the taxpayer eats a chunk of the bill
     
  7. bongman

    bongman Member

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    I wonder how much credit in tax breaks the oil industry is getting and who is paying for it.
     
  8. SamFisher

    SamFisher Contributing Member

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    Which is why true free-marketeers favor fossil fuels, where underprivileged plucky upstarts like ExxonMobil collect billions and billions in drilling and refining subsidies each year.
     
  9. JuanValdez

    JuanValdez Contributing Member

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    There are some credits and some beneficial treatment of depreciation for tax purposes that have helped renewables get to where they are today. And, no doubt it'll hurt the industry when those stop. But, they aren't just propped up by government subsidies anymore. They'll continue to get penetration into the generation stack with or without government help.
     
  10. Major

    Major Member

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    Odd that you don't mention pollution.

    The article covers that, and discusses both the costs with and without subsidies.
     
  11. JuanValdez

    JuanValdez Contributing Member

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    That cost is so hidden, he couldn't find it.
     
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  12. robbie380

    robbie380 ლ(▀̿Ĺ̯▀̿ ̿ლ)
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    There is a strong argument that solar tax credits aren't fostering competitive pricing any longer.

    http://cleantechnica.com/2012/10/04...ment-cleantechnica-exclusive-from-jigar-shah/

    And another article about what we have learned from the German solar power explosion

    http://cleantechnica.com/2013/02/09/germany-solar-power-lessons/



    I feel the age of fossil fuels for power is coming to an end and it will end quicker than people think. It's clear where technology is going and it is moving away from fossil fuels.
     
  13. Cohete Rojo

    Cohete Rojo Contributing Member

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    Fossil fuels are clearly the future. The Germans are begging the Swedes to keep the coal mines open. Germany clearly doesn't have the same technological capacity of the U.S. it has to degrade from nuclear to coal and all the meanwhile can't figure out what fracking is or how to burn natural gas for power.
     
  14. Accord99

    Accord99 Member

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    German solar power is a utter failure given the resources put into it. 38.1GW capacity but only has a capacity factor of 11.3% so that it gets beaten by nuclear, brown coal, black coal, wind and burning wood. It only accounts for 7.4% of total electricity production for the first 10 months of 2014, and electricity is only a fraction of total German energy usage anyways.

    If Germany wanted meaningful CO2 reductions, it should greatly increased nuclear.
     
  15. Faust

    Faust Member

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    i used to hate wind power because i thought it was all hippie bs. but then my uncle's house in west texas got a huge wind farm and there whole house in run by the fans. that wind farm was because of ppl like t boone pickens and the texas govt which are conservative. i thought only liberals would support wind.

    my aunt had to move away from the cities because of her lungs getting all choked up from pollution. she's doing better living out there. i dont believe in global warming, but i do believe in pollution. if solar and wind means less pollution im for it
     
  16. Dairy Ashford

    Dairy Ashford Member

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    Energy delivery is impossible in certain parts of the fourth largest and third most populous country in the world without massive continuous government investment and operation. The economic and sociopolitical risks of system interruption or abandonment are most costly than whatever concentrated economic gain from keeping minority or rural communities from being lit at night or shut off from any outside communication.
     
  17. Dubious

    Dubious Contributing Member

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    That's the historical pattern for improvements in civilization. Freethinkers conceive something new and different, the people who stand to lose out to the new way rail and holler against it, the facts become unavoidable and the change become common place.

    You can direct change, but you can't stop things from always being in a state of change. You can be on the side of change for the Greater Good, or the other side.
     
  18. SwoLy-D

    SwoLy-D Contributing Member

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    DOOMED
    ______________
    ______________

    ;)
     
  19. Invisible Fan

    Invisible Fan Contributing Member

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    I think it'll be around for at least 50 more years (I think it was 7-8 years when I wrote that last time).

    It's mostly a money issue where these loser companies sitting on mountains of cash can out spend and lobby anything they want.

    Other than that, the developing nations should theoretically outpace energy supply or make use of the supply with higher cost of living gains. Since they're gung ho about CoL rather than what's green or brown, the cheaper more abundant infrastructure wins while industrialized nations completely overhaul and upgrade.

    Wind power had always been comparable in price wrt coal. It's just that making enough of them was the biggest bottleneck.

    I'm optimistic current tech will move beyond resource limitation of rare earth and other previous minerals, but outside cheap fusion, we got ways to go and not much time left on the CO2 clock...
     
  20. Severe Rockets Fan

    Severe Rockets Fan Takin it one stage at a time...

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    LOL, whaa?
     

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