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BNEF: Wind And Solar Energy Are Becoming The Cheapest Source Of Electricity

Every six months, Bloomberg NEF will conduct an electricity cost analysis, which is an assessment of the cost competitiveness of different power generation and energy storage technologies – excluding subsidies. The latest analysis shows that, with the exception of Japan, solar and wind energy are now the cheapest sources of electricity generation in all major economies. This includes China and India, and not long ago, coal was the boss of both countries. In India, the cost of a state-of-the-art solar and wind power plant is half that of a new coal-fired power plant.


Due to the adjustment of China's policies, China's large-scale photovoltaic power station market has shrunk by more than one-third in 2018. This in turn led to a wave of cheap global equipment, pushing the global PV (non-tracking) benchmark pricing to $60/MWh in the second half of 2018, down 13% from the first quarter of this year.


BNEF's global onshore wind power generation cost is $52/MWh, down 6% from the analysis in the first half of 2018. This is achieved in the context of cheap turbines and a stronger dollar. In India and Texas, unsubsidized onshore wind power is now cheaper to $27/MWh.


Today, in most parts of the United States, wind power is a source of new mass production that exceeds the combined cycle gas power plant (CCGT) for cheap shale gas supplies. If natural gas prices exceed $3/MMBtu, BNEF's analysis indicates that new and existing CCGTs will be at risk of being rapidly weakened by new solar and wind energy. This means less runtime and more flexibility technologies, such as natural gas peak plants and batteries that do well at lower utilization rates (capacity factors).


Over the past two years, high interest rates in China and the United States have put upward pressure on the financing costs of photovoltaics and wind energy, but these two costs are dwarfed by the decline in equipment costs.

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In the Asia-Pacific region, more expensive natural gas imports mean that the competitiveness of the new combined cycle gas-fired power plant is still lower than the new coal-fired power plant of 59-81 US dollars / MWh. This is still the main obstacle to reducing the carbon intensity of electricity generation in this region.


Currently, short-term batteries are the cheapest source of new fast response and peak capacity in all major economies except the US. In the United States, cheap natural gas provides an advantage for peak natural gas power plants. According to the latest report, with the rapid development of the electric vehicle manufacturing industry, battery costs will fall by another 66% by 2030. This in turn means that the power industry's battery storage costs are lower, reducing peak power costs and flexible capacity to levels never reached in traditional fossil fuel peak power plants.


Batteries that coexist with photovoltaic or wind energy are becoming more common. BNEF's analysis shows that new solar and wind power plants with four-hour battery storage systems are cost-competitive without subsidies compared to new coal-fired power plants and new gas-fired power plants in Australia and India.