It may be hard to believe, but solar and wind became cheaper than natural gas in many places at the end of last year according to the World Economic Forum. The LCOE, or levelized cost of electricity, for coal and natural gas runs at around $100 per megawatt hour. Ten years ago, solars levelized cost was at $600 for the same hour. However, further investment into innovative technology as well as growth in the renewable sector has created a levelized cost of $100 and less today for the renewable. Meanwhile, wind power has a levelized cost half that of traditional energy providers, sitting at 50$ per megawatt hour. The exponential rate at which these renewable sources have become cheaper from just a few years ago suggests even more room for growth into cheaper price ranges. The report also mentioned that government subsidies are not hedging an advantage for these alternative energies, finding from the International Energy Agency that in actuality fossil fuels received four times the amount of government funding in comparison to renewables.
More than 30 countries worldwide have already achieved grid parity, the point where alternative energy costs meet traditional energy costs, and without government subsidies as well.
Now that renewables have become a cheaper source of energy on the grid than natural gas and coal, many claim that a full switch to these alternative sources could threaten the reliability of electrical service in the United States. While there may be some truth to this argument, the evidence has been hard to find. The true problem with renewable currently isn’t one of reliability, but rather capacity. The U.S. energy grid was not originally built for storing energy from renewable sources, and as a result there is currently an oversupply of renewable energy from large producers like California and Texas. California has actually been forced to pay nearby states to take their oversupply of renewable energy in recent months due to an inability to store the surplus. They have paid nearby states to take a valuable commodity off of their hands simply because they have so much of it. That sounds like nothing other than a great opportunity. But despite this abundance of sometimes even negatively priced clean energy flooding the market, further renewable usage in the U.S. is being held back by worries of reliability.
In truth, the nation has not even given renewables an attempt to run much of the energy grid, making it impossible to know whether a threat to reliability is present. Maybe reliability could become an issue if we allow too much renewable energy generation on the grid, but we should wait for evidence of as much to surface. Claiming that reliability is a problem without proper data to support the claim only makes traditional energy suppliers look like they are trying to save their own skin.
Whether you’re an energy industry official or you could care less about the issue, renewable sources may provide cheaper alternatives to powering all our lives, as businesses and consumers. Renewables are no longer a matter of curbing global warming, they’re just a good investment. When the option to make life cheaper across the board exists, we might as well give it a fair shot.
Written by: Chris Stomberg