Solar and wind are now much cheaper than alternatives, even without subsidies. E.g. it is cheaper to build a new solar farm and switch over to it than to continue using an existing coal plant.
The only reason massive subsidies for renewables continue is to accelerate build-out to address the looming climate catastrophe. We need to ramp up to building out a TW of new renewable capacity every year.
I'm not reading it so you can have mine, everyone aside from Mr. russdill please kindly avert your eyes.
Solar and Wind Power So Cheap They’re Outgrowing Subsidies
@markchediak More stories by Mark Chediak
5-7 minutes
For years, wind and solar power were derided as boondoggles. They were too expensive, the argument went, to build without government handouts.
Today, renewable energy is so cheap that the handouts they once needed are disappearing.
On sun-drenched fields across Spain and Italy, developers are building solar farms without subsidies or tax-breaks, betting they can profit without them. In China, the government plans to stop financially supporting new wind farms. And in the U.S., developers are signing shorter sales contracts, opting to depend on competitive markets for revenue once the agreements expire.
relates to Solar and Wind Power So Cheap They’re Outgrowing Subsidies
The developments have profound implications for the push to phase out fossil fuels and slow the onset of climate change. Electricity generation and heating account for 25% of global greenhouse gases. As wind and solar demonstrate they can compete on their own against coal- and natural gas-fired plants, the economic and political arguments in favor of carbon-free power become harder and harder to refute.
“The training wheels are off,” said Joe Osha, an equity analyst at JMP Securities. “Prices have declined enough for both solar and wind that there’s a path toward continued deployment in a post-subsidy world.”
Subsidy-Free Europe
The reason, in short, is the subsidies worked. After decades of quotas, tax breaks and feed-in-tariffs, wind and solar have been deployed widely enough for manufacturers and developers to become increasingly efficient and drive down costs. The cost of wind power has fallen about 50% since 2010. Solar has dropped 85%. That makes them cheaper than new coal and gas plants in two-thirds of the world, according to BloombergNEF.
“Solar got cheap,” said Jenny Chase, an analyst at BNEF. “It’s really that simple.”
China Huaneng Group Windfarm in Eastern China
Wind turbines spin in Qidong, China.
Photographer: Qilai Shen/Bloomberg
Yet for all it’s promise, clean energy still has a long way to go before fully usurping coal and gas. Wind and solar still only accounted for about 7% of electricity generation worldwide last year, according to BNEF. And most wind and solar projects still depend on subsides. In the U.S., in fact, the solar industry is pushing to extend federal tax credits that are scheduled to decline over the next few years.
And then there’s the issue of round-the-clock power. Solar doesn’t work at night. Wind farms go idle when breezes slack. So until battery systems are cheap enough for generators to stockpile electricity for hours at a time, renewables can’t constantly provide power like coal and gas.
Solar module prices have plunged this decade
Perhaps nowhere is the push toward subsidy-free clean energy clearer than on arid expanses of Southern Europe. About 750 megawatts of subsidy-free clean-energy projects are expected to connect to the grid in 2019 alone, across Spain, Italy, Portugal and elsewhere -- enough to power about 333,000 households, according to Pietro Radoia, an analyst at BNEF.
“The cheapest way of producing electricity in Spain is the sun,” Jose Dominguez Abascal, the nation’s secretary of state for energy, said last year.
The road to subsidy-free renewables wasn’t easy for Spain. A decade ago, it offered developers a lavish feed-in tariff, prompting an uncontrolled boom that strained the national treasury. Spain slashed incentives and now has a hands-off energy policy.
China, the world’s largest renewable energy market, also propped up wind and solar for years. Now it’s shifting toward a more market-driven approach. Earlier this year, officials announced a plan to develop 20.8 gigawatts of renewable projects that can only profit from selling electricity into grids at prices equal to or less than coal. Plus, most wind farms built on land -- as opposed to in the ocean -- won’t be eligible for subsidies after 2021.
Cheaper Wind
The picture is less clear in the U.S. Nearly every American wind and solar project remains eligible for subsidies through federal tax breaks, which are scheduled to decrease or phase out altogether over the next few years. Plus, dozens of states have renewable-energy quotas, forcing utilities to buy a certain amount of wind and solar.
Still, they’re starting to compete on their own. The proof is in the sales agreements. For years, clean-energy developers needed 20- or 25-year power-purchase contracts to ensure a return on investment. Now they’re building wind and solar farms with agreements for 15 years or less -- with the expectation that projects will compete against gas- and coal-fired plants in wholesale markets after the deals conclude.
“Renewable energy’s next major evolutionary step is to sell power directly into wholesale markets,” said Richard Matsui, chief executive officer at San Francisco-based solar risk-management firm KWh Analytics. “Investors worldwide are only beginning to dip their toes in those waters.”
(Michael R. Bloomberg, the founder and majority stakeholder of Bloomberg LP, the parent company of Bloomberg News, has committed $500 million to launch Beyond Carbon, a campaign aimed at closing the remaining coal-powered plants in the U.S. by 2030 and slowing the construction of new gas plants.)
This story is part of Covering Climate Now, a global collaboration of more than 250 news outlets to highlight climate change.
— With assistance by James Thornhill, Reed Landberg, Jasmine Ng, Jeremy Hodges, and Chris Martin
Adding wind or solar is currently cheaper than adding coal. The marginal costs of renewable energy are pretty low. The investment costs are also lower than the damage climate change will cause. If we really wanted to we could switch to 100% renewables, for example by printing more money. But just stopping subsidies for fossil fuels or setting up a carbon tax would be good steps.
People thinking renewables wouldn't be cheaper aren't people who don't want renewables. Why would they even get a mention?.
I'm not convinced enough people know that renewables are cheaper to make the latter claim you're making. For example, in some places as soon as renewables come online they get priority access to demand, and other fuel sources get the leftovers. That's still a subsidy, just by another name. So I don't know if they are cheaper.
Finally, the point about renewables isn't only cost, it's also reliability. The subsidy I just mentioned falsely obviates the need for renewables to be reliable from a cost perspective, but that doesn't mean that needing a high base load (and higher the more we move to electric vehicles) isn't the most important thing to supply.
And none of that is about people "not wanting renewables".
Market forces will continue to push out coal and natural gas in favor of rapidly cheapening renewable sources such as wind and solar. Even without subsidies, solar and wind are cheaper in some areas of the country than coal.
Interesting that a NAFTA repeal could help Tesla, although it would come at the expense of the rest of the American auto industry.
We already have energy sources that are much cheaper than coal when you take all the costs into account. If you start demanding that renewable energy must be cheaper than coal when coal gets huge effective subsidies and renewable energy gets none, that's an artificial constraint that makes the problem unsolvable.
It’s literally there in figure 1. Wind and PV are now cheaper than oil, but still more expensive than coal and gas. I’m not sure what you’re getting at though, looking at the price of existing installations is not sufficient to account for future costs. What we do know is that wind and solar are new technologies and costs have been dropping rapidly with increase in production. Carbon fuels meanwhile have remained historically the same inflation adjusted price for the last century.
I'm not saying anything one way or the other what we "should" do, just answering the question "what would make private parties adopt renewable energy". My answer ("money"), in fact, agrees with you: whether it is artificially cheaper or naturally cheaper doesn't matter.
However, I think renewables would be cheaper even without government subsidies. Texas had large wind farms over even 15 years ago. I don't have any information about subsidies on solar panels, but given that the cost trend is halving the price every <n years>, that's pretty powerful. I think you could remove the subsidy and solar panels would still be competitive, and even if not now, than in one more halving period.
Renewables are absolutely not the cheapest form of new energy.
Show me a solar + batteries facility that operates 24x365 at sub 0.05 USD/kWh and I'll concede they're cheaper, but you can't because no such facility exists.
"Cheap enough" should take into account the expected future costs of climate change. That's the major reason for subsidies and regulations to encourage renewable energy usage. There is a huge externality to account for.
They are not cheaper. They appeared cheaper for a while when there was a bubble and interest rates are zero. Now wind and solar farm projects are failing.
and in the last 5 years we went from about 5% to 18% renewables.
The renewables industry in the US wasn't given any special dispensation so it had to compete pretty much without subsidy with natgas and coal which it could only really start to do about 5 years ago (it's cost competitive with coal only this year).
In fact, arguably the US subsidies oil and gas more than renewables.
Nuclear would require massive subsidies to grow beyond 20%. Renewables won't.
Oversimplifying maybe but renewables are passing the tipping point of being the cheapest energy source without needing subsidies which will make things easier.
Renewables are cheaper (and plentiful). If you choose to not build them, no one will shed a tear when you get punched in the face. How’s Germany’s “nuclear turndown and be beholden to Russian gas” policy working out?
Regardless, stop subsidizing fossil fuels. There is no reason not to resource an energy transition and electrification of everything effort as if it was a war effort. To not do so is, clearly, full of economic peril.
That was once true, but not any more; solar and wind are way cheaper than oil based power today, and have been since about 2004.
The tax breaks help of course, but there's still more than 50 GW of electrical capacity worldwide that would be better served economically by renewables than oil
You know there is a fatal flaw in your third argument. Maximum resource cost is bounded by the cost of the renewables. Yet their cost is going down despite producing the same or even more energy. This is completely incompatible with your premise of ERORI always staying below 1.
If burning oil and gas directly was more efficient then it would be impossible for costs to go down beyond a certain point and subsidies would have to grow over time as more and more renewables are deployed.
The reality is that the opposite happened. Countries jumped onto renewables as they became cheaper [0] and subsidies are shrinking across the board.
So whatever your source is, it either had an agenda or it is simply incompetent.
[0] please don't tell me that they didn't become cheaper when the submission article is entirely about renewables becoming cheaper
The only reason massive subsidies for renewables continue is to accelerate build-out to address the looming climate catastrophe. We need to ramp up to building out a TW of new renewable capacity every year.
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