Is Renewable Power Cheaper Than Conventional Power? – ENERGYminute

Organizations like Lazard try to estimate the cost of electricity, known as the Levelized Cost of Electricity (LCOE), by source. For the last several years, the price of renewable electricity prices, including both wind and solar, have been cheaper than fossil fuels and nuclear.

So, do countries with higher amounts of wind and solar have cheaper electricity prices?

The Answer:

Countries with a higher percentage of electricity produced from wind and solar tend to have higher prices.

Do renewables drive up electricity prices?

Reasons why renewables might make electricity more expensive

– Intermittency: Simple LCOE formulas don’t include extra costs for battery storage and redundant renewable sources to cover period of low power generation

– Transmission: Shifting where electricity is generated requires investment into expensive transmissions lines

– Early retirement: Early shutdown of coal or natural gas powerplants passes additional costs onto customers

Reasons why renewables might not make electricity more expensive

– Early times: Existing renewables projects are a mix of cheap and expensive projects. Newer, cheaper projects could bring average prices down

–  Carbon prices: Increasing carbon prices will force fossil fuel prices higher

– Government support: Subsidies and tax breaks could drive down the future price of renewable generation

Simple LCOE calculations about which technologies produce the cheapest electricity usually don’t account for complexities of full electricity markets.

Abbreviations:

LCOE – Levelized Cost of Electricity

Sources:

https://www.lazard.com/perspective/levelized-cost-of-energy-levelized-cost-of-storage-and-levelized-cost-of-hydrogen/

https://www.statista.com/statistics/263492/electricity-prices-in-selected-countries

https://ourworldindata.org/renewable-energy