Now more than ever is the time to invest in renewables. Due to carbon policies in Germany and the United Kingdom, wind power is cheaper than fossil fuels — even without government subsidies.
Wind electricity in the U.K. currently costs $85 per MWh, which is significantly cheaper than the $115 per MWh price tag of natural gas and coal electricity.
Similarly, in Germany, wind generated energy is only $80 per MWh. Natural gas and coal costs in Germany are $118 and $106 per MWh, respectively.
Location, however, definitely seems to be key to determining how wind and solar energy prices stack up against fossil fuels. In the Americas, for example, coal is considerably cheaper at $75 per MWh, while natural gas comes out at about $82 per MWh.
What’s the driving force behind the gap? A major challenge to the economization of most renewable energy sources is their capacity factor. This is the ratio of a power plant’s actual output to its maximum potential output over a given period of time.
Let’s say a solar powered project produces 100 megawatt hours (MWh) of electricity on a clear, sunny day, but generates only 20 percent of that on average weather days. The capacity factor of said project would only be 20 percent.
Although fossil fuels are terrible for the environment, they have consistently maintained an impressively high capacity factor compared to renewable energy sources. The thing is, such results are no longer guaranteed. A U.S. natural gas plant, for instance, is likely to generate 70 percent of its 100 percent potential.
Due to increasing volatility, seasonal demand and maintenance, fossil fuel energy is losing its appeal. As renewable energy becomes cheaper, the future of fossil fuels will only continue to change drastically
As fossil fuel capacity factors decrease, renewable capacity factors increase.
How Cheap Are We Talking?
In 2014, wind power became the cheapest source of electricity in America. As of January 2017, however, solar power has surpassed wind’s groundbreaking achievements and is now crowned the cheapest electricity source.
The startup cost of installing a solar or wind project is a common concern. Once the project is up and running, however, the electricity generated from said project requires no extra costs. In other words, electricity generated from solar or wind projects is as good as free.
At the same time, for each watt produced in coal and gas plants, more fuel is necessary. Using renewable energy over fossil fuels can therefore amount to exponential savings.
In 2011, solar power was predicted to cost 50 cents per watt by 2030. But solar currently costs a mere 60 cents per watt — nearing the prediction more than a decade ahead of schedule.
In fact, since last year the cost of solar energy for large-scale projects has decreased by 11 percent. Not to mention that solar’s levelized cost of energy (LCOE) now ranges from $46 per MWh to $56 per MWh.
Similarly, wind power for large-scale projects is becoming more affordable. Producing unsubsidized wind only costs between $32 and $62 per MWh.
Things aren’t looking as good for the fossil fuel industry. Unsubsidized natural gas ranges from $48 per MWh to $78 per MWh, while unsubsidized coal is even more expensive — reaching $60 per MWh to $143 per MWh.
So it appears that fossil fuels are not only harming the environment, but also becoming a financial burden.
Fortunately, renewables are being used more often, and thereby reducing coal and natural gas plants. As the number of these plants decreases, the price of fossil fuel energy jumps even higher — and the cost of using them to generate electricity goes up.
How Did This Shift Happen?
How did solar and wind power become so cheap so quickly? While the falling cost of wind turbines is the easy answer, there’s more to the story than that.
Placing turbines in the right areas, for instance, makes all the difference. Wind turbines reach stronger winds when they are installed in higher locations. Wind turbines have also been redesigned to last longer and break down less, and this careful crafting helps generate more and more energy
As far as the innovation of solar energy is concerned, Jenny Chase, the head of solar at Bloomberg New Energy Finance, put it best.“It’s pretty simple—it’s all about the experience curve,” Chase told The Atlantic. “The more of something we do, the better we get at it.”
With every year, more solar energy projects are piloted and marketed — translating into better sales, better distribution and, most importantly, better products. Solar manufacturers have begun reconfiguring their cells for increased energy generation. They have also started using less expensive, while still highly effective, materials during production.
Solar and wind energy production will continue to increase as costs decrease. This trend bodes well for maintaining a sustainable environment. Plus, who wouldn’t want to get cheaper electricity?
Large companies like Google are noticing the shift in capacity factor and have taken advantage of it in full.
Google’s Goals for 2017
Google consumed as much energy as the entire city of San Francisco in 2015. To atone for their hefty expenditure, they have vowed to run only on solar and wind power by 2017.
In fact, according to Jonathan Koomey– a lecturer on environmental sciences from Stanford– Google’s electricity consumption was equal to 5.7 terawatt-hours. That’s enough electricity for “two 140,000-person towns.”
Joe Kava, Google’s senior vice president of technical infrastructure, explained that wind power costs remain consistent, while fossil fuel energy tends to fluctuate. Therefore, switching to solely renewables will allow them to plan and budget more accurately each year.
As the incredibly successful and mammoth company it is, Google has proven to be quite the leader in the tech field. Hopefully, corporations of similar size will feel the pressure and follow Google’s sustainable business pursuits. The more companies that commit to renewable energy, the better off the environment will be.
Converting to renewable energy from fossil fuels could be a difficult transition. Luckily, Green-Buildings.com offers multiple solar training courses to help educate and prepare those embarking on the next generation of solar projects. Take advantage of our resources so that you can start generating electricity for free today!
Kristen is a writer for Poplar Network.