It is no secret that the cost of renewable energy has been tumbling in recent years, but a recent report published by financial firm Lazard Ltd. has reached the conclusion that building new solar and wind generating capacity in the United States may work out cheaper than persevering with existing coal and nuclear plants.
Lazard publishes its Levelized Cost of Energy Analysis annually to compare the financial cost of different forms of energy generation, as well as the costs of different storage technology. A press release announcing the new report says:
“In some scenarios the full-lifecycle costs of building and operating renewables-based projects have dropped below the operating costs alone of conventional generation technologies such as coal or nuclear.”
The report does stress, however, that such situations will only arise when a region is particularly suitable for that form of renewable generation. For example, the US south-west is well suited for solar power generation. The report also cautions that despite the promise offered by alternative energy solutions, they are unlikely on their own to offer sufficient energy generation for a developed economy, so conventional generation will stay in the energy mix for some time yet.
New technologies may change this in future, though. Many oil majors are already diversifying into renewables as they look towards a future less dependent on fossil fuels. An example of this is ExxonMobil, which makes the lubricants for Mobil UK stockists and is investing $1bn a year in researching alternative energy sources.