Onshore wind “fully competitive” with coal and gas says report

Onshore wind is “fully competitive” with coal- and gas-fired power in some world regions, while solar power is “closing the gap”, according to a report released this week.

Bloomberg New Energy Finance’s Levelised Cost of Electricity Update for the second half of this year showed that both onshore wind and crystalline silicon solar photovoltaics (PV) have reduced costs worldwide in 2015, while costs for gas- and coal-fired generation have risen.

According to the report, the global average levelized cost of electricity (LCOE) for onshore wind fell from $85/MWh in the first half of the year to $83/MWh in H2, while the LCOE for PV solar fell from $129/MWh to $122/MWh.

In the same period, the report said, the LCOE for coal-fired generation increased from $66/MWh to $75/MWh in the Americas, from $68/MWh to $73/MWh in Asia-Pacific, and from $82/MWh to $105/MWh in Europe. The LCOE for combined-cycle gas-fired generation rose from $76/MWh to $82/MWh in the Americas, from $85/MWh to $93/MWh in Asia-Pacific and from $103/MWh to $118/MWh in the EMEA region.

Offshore wind reduced its global average LCOE from $176/MWh to $174/MWh, but still remains significantly more expensive than onshore wind, PV, coal or gas, BNEF noted, while the LCOE of biomass-fired generation held steady at $134/MWh. Nuclear power saw “significant increases” in LCOE in several regions, rising to $261/MWh in the Americas and $158/MWh in EMEA.

At the country level, the report found that onshore wind is now fully cost-competitive with both gas-fired and coal-fired generation, once carbon costs are taken into account, in the UK and Germany. In the UK, the LCOE of onshore wind was $85/MWh in the second half of 2015, compared to $115/MWh for combined-cycle gas installations and $115/MWh for coal-fired plants. In Germany, the LCOE of onshore wind stood at $80/MWh, compared to $118/MWh for gas and $106/MWh for coal.

In China, BNEF said onshore wind is now cheaper than gas-fired power, at $77/MWh versus $113/MWh, but it is still much more expensive than coal-generated electricity, at $44/MWh, while PV power stands at $109/MWh. Coal and gas, at $65/MWh, are still cheaper in the US than onshore wind at $80/MWh and PV at $107/MWh.

Luke Mills, an energy economics analyst with BNEF, said: “Generating costs continue to vary greatly from region to region, reflecting influences such as the shale gas boom in the US, changing utilization rates in areas of high renewables penetration, the shortage of local gas production in East Asia, carbon prices in Europe, differing regulations on nuclear power across the world, and contrasting resources for solar generation. But onshore wind and solar PV are both now much more competitive against the established generation technologies than would have seemed possible only five or 10 years ago.”

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