Solar and wind power have long struggled to compete with conventional power sources on two fronts: distribution and cost. However, new US industry data published in the New York Times reveals that the cost of these renewable energy sources has fallen dramatically in the last 5 years, making them competitive with – and sometimes even beating – energy from fossil fuels.
The New York Times reports that cost equality has particularly accelerated in 2014, according to utility executives. In the Great Plains and Southwest regions, companies are signing lower percentage purchase agreements for renewables than for natural gas. Although the subsidies continue to contribute to the low price for renewables, in September 2014 financial advisory Lazard released figures showing that solar and wind could remain competitive with gas and coal without the subsidies. Lazard has been comparatively studying the costs of various energy sources since 2008. The managing director of the firm, told the New York Times, “It is really quite remarkable, compared to where we were just five years ago, to see the decline in the cost of these renewable technologies ”.
Meanwhile, in Texas in 2014, Austin Energy signed a 20-year contract with a solar farm to purchase power at less than 5 cents per kWh. In Oklahoma, American Electric Power (AEP) put out a tender for supply in 2013 and ended up tripling projected wind power purchases once it saw the bids submitted. AEP CEO of Renewable Energy Jay Godfrey commented: “The wind was for sale.” Since Oklahoma utilities are not required by law to purchase energy from renewable sources, he noted, “We did it because it made sense to our taxpayers.”
Emily Williams of the American Wind Energy Association confirmed that in 2013 “ a record number of power purchase agreements were signed at historically low prices. ” Long-term contracts are being signed at an average of 2.1 cents per kWh, less than half that of 2009. Williams added: “ We are finding that in certain regions there are wind projects that compete or improve the price from traditional generation sources. “
With a future for renewable energy generation subsidies in the United States, after Republicans took control of the Senate as well as the House in January, it is encouraging to learn that the industry has advanced to the point of being competitive without the politicians.