Wind & Solar Set To Be Cheaper Than Gas
New research suggests that in the next five years wind and solar energy will cost the same as cheap natural gas.
Many wind farms are already competitive with coal, gas and nuclear energy generating plants but improvements in technology and reductions in cost will mean that within five years onshore wind farms will be in line with the cost of cheap natural gas according to research from Bloomberg New Energy Finance (BNEF).
It’s not clear whether this fall in costs for onshore wind turbines will help to reduce business electricity prices. It may be the case that rather than reducing prices, the fact that wind power is as cheap as natural gas simply means that business electric prices don’t increase as fast as they might have done otherwise.
Researchers have looked at the cost of wind energy since the middle of the 1980’s and found that the cost of electricity generated by wind has fallen by 14% every time installed capacity doubled. Costs have fallen for wind generated electricity for a number of reasons including advanced manufacturing techniques, improved materials and bigger turbines. Operators have gained more experience as more wind farms have gone online and so plant operations and maintenance has improved too.
In addition there are more companies manufacturing turbines and as a result supply now exceeds demand, resulting in a fall in costs. These falls in costs will help to further reduce the cost of electricity generated by wind turbines. In fact BNEF suggests costs will fall another 12% by 2016.
The lead analyst at BNEF, Justin Wu said “The public perception of wind power tends to be that it is environmentally-friendly, but expensive and intermittent. That is out-of-date — in the best locations, where generation is already cost-competitive with fossil fuel electricity that will be the case for the majority of new onshore turbines installed worldwide by 2016”.
It often takes years for new technology costs to be on a par with technology which is already in place. It’s actual field experience which makes all the difference and without that experience improvements and a reduction in costs cannot happen.
Justin Wu said “In the next few years the mainstream world is going to wake up to wind cheaper than gas, and rooftop solar power cheaper than daytime electricity. Add in the same sort of deep long-term price drops for power storage, demand management, LED lighting and so on – and we are clearly talking about a whole new game”.
While cheap electricity may now be seen as a thing of the past the fact that power generated by wind is set to cost the same as cheap gas may help to keep electricity prices for business down. As engineers and manufacturers gain more experience and knowledge of wind turbines and different environments and maintenance, costs may continue to fall.