If you’re operating a coal or nuclear plant, you’d save money in the long run by scrapping it and building a solar or wind farm instead.
Wind and solar power are getting cheaper every day, and lower costs means renewable energy is giving coal and nuclear power a run for its money—quite literally.
A year ago, solar power became the world’s cheapest form of energy. Currently, solar and wind farms are the best investments in large swaths of the United States. Now, a new report from financial firm Lazard Ltd. concludes that solar and wind are so cheap that building new wind and solar farms costs less money than continuing to run current coal or nuclear plants.
Lazard’s annual study, the Levelized Cost of Energy Analysis (LCOE), compares the costs of different types of energy generation and storage tech. According to their most recent report, released earlier this month, the cost of alternative energy sources like wind and solar have fallen far enough to make new facilities competitive with current coal and nuclear plants.
“In some scenarios the full-lifecycle costs of building and operating renewables-based projects have dropped below the operating costs alone of conventional generation technologies such as coal or nuclear,” according to the press release.
Of course, this is only for “some scenarios,” which means wind and solar won’t be replacing every coal and nuclear plant in the country. But in places where wind and solar are especially cheap—the Midwest for wind, the Southwest for solar—we’re likely going to see many old coal and nuclear plants phased out for new wind and solar installations.
But coal and nuclear will still hang around in these areas a bit longer because of baseline power. Utilities still need power plants to keep the lights on when the wind stops or the sun goes down. Right now those jobs are still only filled by nuclear and fossil fuels.
“Although alternative energy is increasingly cost-competitive and storage technology holds great promise, alternative energy systems alone will not be capable of meeting the base-load generation needs of a developed economy for the foreseeable future,” says the press release. “Therefore, the optimal solution for many regions of the world is to use complementary conventional and alternative energy resources in a diversified generation fleet.”
So no, we’re not quite free of fossil fuels yet. But, every year solar and wind power get cheaper and coal plants are replaced by clean energy farms. Someday we’ll reach a completely renewable future, but for now we’ll have to live with a gradual transformation.