The cost of utility-scale solar power has fallen as low as $36 per megawatt hour (MWh) in the US—without subsidies. That makes it as cheap as the marginal or direct costs of power from coal-fired power plants and less than the cost of power from natural gas fired power plants. That’s according to the latest Levelized Cost of Energy (LCOE) analysis from Lazard, which benchmarks the cost of producing electricity across the US.
The latest analysis from Lazard found that the levelized costs of both solar and wind power are now less expensive than power from other energy sources in the US. Considering incentives, the costs of solar power fall as low $32 per MWh and wind as low as $14 per MWh. Comparatively the power from most coal plants continues to cost as low as $60 per MWh and natural gas as low as $41 per MWh.
“Although diversified energy resources are still required for a modern grid, we have reached an inflection point where, in some cases, it is more cost effective to build and operate new alternative energy projects than to maintain existing conventional generation plants” explained George Bilicic, vice chairman and global head of Lazard’s Power, Energy & Infrastructure Group.
While onshore wind power remained cheaper than solar in the report, it observed that the costs of solar power are the fastest falling prices among all the energy sources. It found that in the last nine years the costs of solar power fell 88 percent. And in the last year, the cost dropped 13 percent.
Residential solar costs, however remained much higher than utility-scale solar costs. At the low-end Lazard found residential solar had a levelized cost of $146 per MWh.
The costs of other technologies, including wind and natural gas have also fallen in the past year. Wind power costs fell almost 7 percent in the past year and the cost of power from combined cycle gas has declined 4 percent in the past year.
The results of the Lazard report reaffirm recent findings from the University of Texas at Austin. That study found that solar and wind are increasingly becoming the cheapest form of energy in an expanding swath of the US.
“These reports are just the latest evidence that solar is the smart choice not only for consumers, but also the utilities that deliver their power,” observed the Solar Energy Industries Association in post about the Lazard report. It noted that the amount of solar installed in the US is expected to double over the next five years, from more than 58 gigawatts now installed.
The rapid ramp-up will require some changes to the electric grid, like energy storage. As such, Lazard also looked at the costs of energy storage, which will become more important as more wind and solar power enter the US energy infrastructure.
“As alternative energy costs continue to decline, storage remains the key to solving the problem of intermittency and we are beginning to see a clearer path forward for economic viability in storage technologies,” Bilicic said.
The report found that lithium-ion is still the cheapest form of new energy storage technologies. It also said that lithium-ion is continuing to see cost drips and anticipated that over the next five years it could see additional price drips of up to 28 percent.Tweet