U.S. energy generation is increasingly nearing a “cost crossover,” in which traditional energy sources will become more expensive than wind and solar. The crossover is even closer when the two variables sources are combined with battery storage, which can smooth the electric generation output—overcoming wind and solar's historical challenges, according to the Bloomberg New Energy Finance report, “New Energy Outlook 2018.”
“Our team has looked closely at the impact of the 79 percent decrease seen in lithium-ion battery costs since 2010 on the economics of this storage technology in different parts of the electricity system. The conclusions are chilling for the fossil fuel sector,” writes Elena Giannakopoulou, head of energy economics at BNEF.
The levelized cost of electricity (LCOE) for lithium-ion batteries has fallen 76 percent from 2012 to $187 per megawatt-hour, representing a 35-percent drop since this time last year, according to the report’s LCOE update for the first half of 2019. Since 2010, the LCOE per megawatt-hour for onshore wind, photovoltaic (PV) and offshore wind have fallen by 49 percent, 84 percent and 56 percent, respectively.
“Cheap batteries mean that wind and solar will increasingly be able to run when the wind isn’t blowing and the sun isn’t shining,” Giannakopoulou writes. “We expect 1,291 gigawatts of new battery capacity added to 2050, some 40 percent of which will be placed behind-the-meter.”
By 2050, the cost of an average PV plant is expected to fall 71 percent, and wind energy costs are expected to drop 58 percent. Because of this, wind and solar technology will provide nearly 50 percent of the world’s total electricity generation, with hydro, nuclear and other renewables taking total zero-carbon electricity up to 71 percent. By 2050, BNEF expects only 29 percent of the electricity production worldwide to result from burning fossil fuels, down from 63 percent today.
“PV and wind are already cheaper than building new large-scale coal and gas plants. Batteries are also dropping dramatically in cost,” she writes. “As PV and onshore wind emerge as the cheapest sources of bulk generation, flexibility becomes a top priority for power grids across the world.”
Meanwhile, research by Energy Innovation, in partnership with Vibrant Clean Energy, found that, in 2018, 211 GW of existing U.S. coal capacity, or 74 percent of the national fleet, was at risk from local wind or solar that could provide the same amount of electricity more cheaply. By 2025, at-risk coal is expected to rise to 246 GW—nearly the entire U.S. fleet.
Read more on that report here.