According to a new report by Bloomberg New Energy Finance, which examined the levelised cost of electricity worldwide, solar and/or onshore wind are now the cheapest and preferred economic generation source in most large economies, including China and India “where not long ago, coal was king”.
The report also revealed that in India, best-in-class solar and wind plants are now half the cost of new coal plants.
The study showed that the utility-scale solar PV market in China has contracted by more than a third in 2018 because of policy revisions in that country.
“This in turn has created a global wave of cheap equipment that has driven the benchmark global levelized cost of new PV down to $60/megawatts per hour in the second half of this year, which represents a 13 per cent drop from the first half.
The report also said its benchmark global levelised cost for onshore wind now sits at $52/megawatts per hour.
“This is on the back of cheaper turbines and a stronger US dollar,” the report explains.
“Onshore wind is now as cheap as $27/megawatts per hour in India and Texas, without subsidy.”
It also added that “in most locations in the U.S. nowadays, wind outcompetes combined cycle gas plants supplied by cheap shale gas as a source of new bulk generation.”
The report also said that in the Asia-Pacific, given increasing gas prices, more expensive gas imports mean that the cost of new-build combined-cycle gas plants which is between $70-117/megawatts per hour continue to be less competitive than new coal-fired power at $59-81/megawatts per hour.
“This remains a major hurdle for reducing the carbon intensity of electricity generation in this part of the world,” it noted.
As electric vehicle manufacturing ramps up, battery costs are set to drop another 66 per cent by 2030, according to Bloomberg New Finance analysis. This, in turn, means cheaper battery storage for the power sector, lowering the cost of peak power and flexible capacity to levels never reached before by conventional fossil-fuel peaking plants.
The report also highlighted that batteries co-located with PV or wind are becoming more common and the analysis suggests that new-build solar and wind paired with four-hour battery storage systems “can already be cost competitive, without subsidy, as a source of dispatchable generation compared with new coal and new gas plants in Australia and India”.