July 5, 2018

...AND CHEAPER...:

Clean energy will do to gas what gas has done to coal: Globally, solar and wind projects now have the lowest life-cycle cost of all electricity sources (Jules Kortenhorst & Mark Dyson, 5/30/18, WEF)

Natural gas is currently cheap and its power plant technology is mature. This is why it is so prominent in electricity production and why so much investment is planned for it. But innovation in other technologies is quickly catching up and will likely put that investment in natural gas at risk. RMI analysis found that the costs of renewable energy, battery storage and energy efficiency are continuing to fall very quickly. In the US, benchmark prices for wind, solar photovoltaic and battery projects have fallen by 65-90% in the past 10 years. They are forecast to continue falling by a further 50% or more through 2030. Globally, solar and wind projects now have the lowest life-cycle cost of all electricity sources, according to data from the World Economic Forum released in December 2016.

The rapid pace of decline in cost has important implications for the global market for new gas infrastructure. Even in the US, with its domestic sources of cheap natural gas, the recent RMI report found that a portfolio of renewable energy, battery storage and energy efficiency can often be developed at a lower cost than a new gas-fired power plant, with lower financial risk and zero carbon emissions. RMI also found that because the cost to develop new clean energy portfolios is falling so rapidly, they are likely to beat just the operating costs of efficient gas-fired power plants within the next two decades.

RMI's US-focused analysis suggests that hundreds of billions of dollars of planned investment in natural gas infrastructure could be stranded over the coming decades, despite the US' abundance of cheap, local gas. In many global markets, imported LNG is much costlier than domestic gas in the US (adding US$2-4/MMBtu). In other markets, such as Western Europe, political risks associated with gas supply could limit availability or raise prices even further. As prices for renewable energy fall quickly around the world, more and more markets will find it attractive to lock in low-cost renewables, instead of paying more for natural gas-based power generation.



Posted by at July 5, 2018 4:18 AM

  

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