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Bloomberg report: PV premium vs coal dropped by third in six months?

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  • Bloomberg report: PV premium vs coal dropped by third in six months?

    http://about.bnef.com/press-releases...s-fossil-fuels says:

    "The BNEF study shows that the global average levelised cost of electricity, or LCOE, for onshore wind nudged downwards from $85 per megawatt-hour in the first half of the year, to $83 in H2, while that for crystalline silicon PV solar fell from $129 to $122.
    In the same period, the LCOE for coal-fired generation increased from $66 per MWh to $75 in the Americas,... The LCOE for combined-cycle gas turbine generation rose from $76 to $82 in the Americas..."

    By those figures, the premium for PV over coal-fired generation was (129-66)=$63/MWH in 2015H1, and (122-75)=$47/MWH in 2015/H2.
    That's a pretty fast decline. It's a bit hard to believe.

    Now a cautionary word; just because the premium for something falls to zero doesn't mean it's economically viable (without considering subsidies or external costs of carbon emissions, anyway):
    http://www.forbes.com/sites/williamp...ing-time-bomb/ points out that LCOE isn't really a great metric by itself. It seems that if the LACE ("levelized" avoided cost of electricity) for PV is greater than its LCOE, then it's worth building.
    http://www.eia.gov/forecasts/aeo/ele...generation.cfm estimates those figures for 2020, and concludes that on average, the only power plants worth building in 2020 are geothermal, "reflecting the fact that on average, new capacity is not needed in 2020."
    It'd be interesting to see their Table 4 redone with the effect of carbon pricing included.

  • #2
    Another interesting point from the study:
    http://www.bloomberg.com/news/articl...ing-point-bnef
    points out
    "For the first time, widespread adoption of renewables is effectively lowering the capacity factor for fossil fuels. That's because once a solar or wind project is built, the marginal cost of the electricity it produces is pretty much zero—free electricity—while coal and gas plants require more fuel for every new watt produced. If you're a power company with a choice, you choose the free stuff every time.
    It’s a self-reinforcing cycle. As more renewables are installed, coal and natural gas plants are used less. As coal and gas are used less, the cost of using them to generate electricity goes up. As the cost of coal and gas power rises, more renewables will be installed. "

    They didn't use the words "death spiral", but the thought did cross my mind when I read that.

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    • #3
      They didn't use the words "death spiral", but the thought did cross my mind when I read that.
      How about life spiral?
      SunnyBoy 3000 US, 18 BP Solar 175B panels.

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      • #4
        http://clkrep.lacity.org/onlinedocs/...ISC_6-3-15.pdf
        says that Los Angeles expected to pay $58.65/MWh for the output of the Springbok 2 solar plant.
        The PPA was just signed this week
        http://www.8minutenergy.com/2015/11/...-2-solar-farm/
        and the plant goes online late next year, so who knows what the actual price is.

        $59 is a lot less than the $122 from the BNEF report.
        I suppose solar might be cheaper in the desert near Los Angeles than in the average location... but geez, Springbok 2 is so much cheaper than that estimate that maybe the two figures aren't actually measuring the same thing. Anyone know?

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        • #5
          Are you sure that the cost of coal/gas MW price increase is from less usage and not because politicians choose to condemn them by taxing them more or add costly cleaning measures? It would seem if there's less usage their fuel supply cost would go down. I'm not an economist, but I do know that wind/solar enjoy generous tax credits that helps to prop it up. But there will always be need for the dirtier alternative as wind/solar fuel not always being there.

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          • #6
            Originally posted by 8.4 View Post
            Are you sure that the cost of coal/gas MW price increase is from less usage and not because politicians choose to condemn them by taxing them more or add costly cleaning measures? It would seem if there's less usage their fuel supply cost would go down. I'm not an economist, but I do know that wind/solar enjoy generous tax credits that helps to prop it up. But there will always be need for the dirtier alternative as wind/solar fuel not always being there.
            I have no idea about the economics of coal, but it seems to me that good old American
            ingenuity has contributed to coal's downfall. Companies producing natural gas and oil
            via new techniques like fracking have made energy so cheap that coal is no longer the lowest cost fuel.
            God bless America and these patriotic energy companies, making life better for Americans!

            As to why LA is paying less than BNEF estimated for solar, maybe the LA price is after
            the 30% investment tax credit and after figuring in the revenue stream from selling renewable
            energy credits. That would bring the two numbers withing spitting distance of each other.

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