…Worldwide Costs for Power Generation…
The International Energy Agency (IEA) recently issued a report, World Energy Outlook WEO 2018, on the energy transition that, according to the IEA, is underway in an effort to combat climate change.
The IEA claimed that the cost of wind and solar is declining and that they can replace fossil fuels.
The IEA’s report, however, seems to contradict this claim and proves that wind and PV solar are more expensive than electricity generated from coal or natural gas.
The chart shows the amount of new power generation being installed by 2020.
The capacity factors for PV solar, Wind, Coal, and natural gas were calculated using information from the IEA chart. (Capacity factor is the amount of electricity a wind turbine, or any other power generation method, produces over a year, compared with how much it should produce using its nameplate rating.)
Capacity factors derived from the IEA chart:
- PV Solar: 6%
- Wind: 31%
- Coal: 55%
- Natural Gas: 46%
These capacity factors appear low. The U.S. Energy Information Administration (EIA) estimated CFs for Coal of 85% and natural gas as 87%. The EIA also estimated wind at 35% and PV Solar at 25%. Recent EIA reports omit CFs for Coal, and uses estimates of CFs in 2022, not actual CFs for 2018.
The IEA’s PV Solar CF can likely be accounted for by where PV Solar was installed. Most PV Solar installations in the United States are in areas having insolation levels reasonably conducive to PV Solar, while most PV Solar installations elsewhere in the world are at higher latitudes where insolation levels are not conducive to PV Solar.
I emailed the IEA and asked for their CF data in an effort to determine why the IEA’s CFs were so low, but was told I would have to buy their WEO 2018 report.
Rather than buying the IEA WEO 2018 report, the data from the above IEA graph was used to calculate capacity factors and costs.
The cost per KW, using US costs, for building each type of power plant is shown here:
- PV Solar: $1,000
- Wind: $2,000
- Coal: $2,800
- Natural Gas: $1,000
Calculating the cost of constructing each type of power plant, i.e., by multiplying the gigawatts being installed (from the chart) by the cost per KW, and then dividing the total cost by the total amount of electricity actually generated by each source, results in the following costs per Terawatt hour.
Cost per Terawatt hour:
- PV Solar: $2,043 million
- Wind: $727 million
- Coal: $583 million
- Natural Gas: $250 million
This establishes that renewables, i.e., wind and PV Solar, are more expensive than generating electricity from coal-fired and natural gas combined cycle (NGCC) power plants.
The media has repeatedly reported contracts between suppliers and utilities where wind and PV Solar are less expensive than electricity generated by coal-fired and NGCC power plants, implying that wind and solar are the least costly methods for generating electricity. As the above calculations demonstrate, the contracts reported by the media must be incorporating subsidies to reduce their costs.
The IEA WEO 2018 supports a worldwide energy transition and forecasts capacity additions in power generation, by type, by 2020.
Using data from the IEA chart, the above calculations demonstrate that electricity from coal-fired and NGCC power plants is far cheaper, four times less expensive when comparing NGCC power plants with PV Solar plants, than renewables.
There is no need to delve into levelized cost of electricity (LCOE) and all the minutia associated with LCOE calculations. The cost and output of units being installed worldwide establishes, unequivocally, that wind and PV Solar are more expensive.
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