From the Energy Information Aministration: and for the full story:Renewable Energy is Already Cheap
The “Total System Levelized Cost” is what the Department of Energy uses to assess the cost of different energy sources. It represents the long term price adjusted for time value, since money now is worth more than money later. According to that metric, coal is still cheaper than solar and wind (although wind is very close).
However, the operating and maintenance (O&M) cost of wind and solar PV is actually much lower than coal- less than half! It’s the start-up cost which drives up their price, but once they’re built, they don’t need to pay for any fuel. Most of the actual cost of wind and solar plants is actually just interest on the loans that they use to set up the plants. This means it’s not really the plants themselves which are expensive- it’s their financing. And since many of the companies that invest in renewable energy are brand new start-ups with no credit history, they’re stuck paying high interest too.
This suggests an obvious policy solution- more government grants and loan guarantees for renewable energy. This would lower their interest, reducing the cost of servicing the bonds and therefore drop the adjusted price of renewable energy plants closer to their operating cost. At that point, we can have the best of both worlds- energy which is both cheaper and less polluting than coal or gas.
Of course, this would require a congress which isn’t completely corrupted by the fossil fuel industry, but we can dream.
(image from Stephen Leahy)
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