Renewable Energy May Soon be Cheaper Than Existing Fossil Fuel Plants
While 2018’s solar tariffs have increased the prices of some international modules, the solar industry continues to rapidly expand. The price of solar has decreased drastically over the last decade and will continue to fall.
Experts forecast that prices will drop by about 50 percent due in part to industry expansion and technological advancements.
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Vishal Shah, clean energy expert and former Managing Director at Deutsche Bank, expects utility-scale solar to offer the lowest cost option for new power generation in most parts of the world and [that] distributed solar power costs would be almost 50% lower compared to the price of current grid electricity. In many parts of the US, the combination of renewable energy and storage is approaching or achieving grid parity, which means that the levelized cost of renewable energy is equivalent or lesser than that of existing energy sources.
As grid parity becomes a reality for renewable energy resources across the country, grid planners are being forced to reevaluate their portfolio planning strategies.
Around 500 gigawatts on the grid will near retirement age in 2030. The industry has recently turned to natural gas as a potential solution to address the grids aging infrastructure. A glut of cheap natural gas helped it surpass coal as the largest electricity source in America for 2017.
However, a recently released report from the Rocky Mountain Institute found that the cost-effectiveness of a combination of renewable energy, distributed energy resources, and storage is beginning to undercut natural gas plants in many areas. According to the Rocky Mountain Institutes Alex Engel, Over the next 10-20 years, clean energy costs are predicted to decline to the point where its cheaper to build the clean energy portfolios than it is to run an existing gas plant.
While cost-effectiveness currently varies across the US, areas that have traditionally been fossil-fuel friendly are being enticed by cheap, renewable energy. Within the next two to three decades, its likely that a renewables-heavy portfolio will soon dominate the entire grid.