Solar & wind power remain incredibly affordable, says latest Lazard report.

By Oliver Townsend Jun 25, 2024
LCOE of Solar & Wind Still Super Cheap — New Lazard Report.pngOrginal image from:

Renewable energy sources such as solar and wind power continue to dominate the energy sector due to their competitive pricing. According to the latest report by Lazard, the levelized cost of energy (LCOE) for solar and wind power remains impressively low, making them attractive options for new electricity generation. While the high-end estimates for these renewable sources have decreased slightly, the low-end estimates have seen a slight rise for the first time in years.

The Dominance of Solar and Wind Power

When comparing the cost of energy across different power sources, utility-scale solar power and onshore wind power emerge as the most cost-effective options. Despite their relatively low capacity factors, solar and wind power can be made more reliable by integrating stationary energy storage solutions. By including storage, onshore wind power can match the cost of combined cycle gas power plants, while utility-scale solar power is not far behind. In scenarios where the grid demands power during peak solar and wind conditions, these renewable options without storage still offer the most economical choice.

The Rise of Offshore Wind Power

While offshore wind power is becoming more competitive, it still remains more costly than onshore wind power combined with energy storage. Fossil gas power plants, although competitive in terms of LCOE, fail to account for social costs associated with methane leaks. On the other hand, coal and nuclear power are being priced out of the market, leading to a shift towards cleaner energy sources.

Key Findings from the Lazard Report

Lazard’s report highlights the importance of well-capitalized companies in driving the development of renewable energy assets. Despite fluctuations in costs due to factors like interest rates, companies with strong balance sheets and access to economies of scale will continue to lead the transition to renewable energy. The report also notes a tightening of LCOE ranges, reflecting the stability of average costs year-over-year.

Implications for the Energy Sector

The evolving landscape of energy generation technologies underscores the importance of investing in renewable sources like solar and wind power. As high-end LCOE estimates decrease and low-end estimates rise, the need for sustainable and cost-effective energy solutions becomes more evident. By embracing renewable energy and innovative storage solutions, the energy sector can move towards a cleaner and more efficient future.

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