Wind and solar power are “much more competitive” against dirty energy sources than they were even just a few years ago, according to a detailed global analysis published this week.
In fact, according to the findings from the research company Bloomberg New Energy Finance (BNEF), wind power is now the cheapest electricity to produce in both Germany and the U.K., even without government subsidies. Though Denmark passed the same milestone last year, this is the first time that threshold has been crossed by a G7 economy.
The analysis took into account not just the cost of generating a megawatt hour (MWh) of electricity, but also the upfront capital and development expenses, the cost of equity and debt finance, and operating and maintenance fees.
In the U.S., coal and gas are still cheaper, at $65 per MWh, compared to onshore wind at $80 and solar at $107.
Still, given documented trends, “[i]t’s impossible to brush aside renewables in the U.S. in the same way it might have been just a few years ago,” writes Bloomberg’s Tom Randall.
“Renewables are really becoming cost-competitive, and they’re competing more directly with fossil fuels,” BNEF analyst Luke Mills told Bloomberg. “We’re seeing the utilization rate of fossil fuels wear away.”
Indeed, while the future for renewables looks bright, the outlook for coal and other dirty energy sources is decidedly more dismal—and bound to become even more so.
“It’s a self-reinforcing cycle,” writes Randall. “As more renewables are installed, coal and natural gas plants are used less. As coal and gas are used less, the cost of using them to generate electricity goes up. As the cost of coal and gas power rises, more renewables will be installed.”