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Wind and Solar Now Costing Less than Fossil Fuels

Bloomberg report shows that renewables are cheaper than competitors

Onshore wind farm

Onshore wind farm

A new report from Bloomberg New Energy Finance shows that wind and solar energy generation is cheaper than fossil fuels. The Levelised Cost of Electricity (LCOE) – which is a measure of how the financial statistics really compare, shows costs have dropped. New onshore windfarms are now the cheapest way for a power company to produce electricity in Britain, £55 per megawatt hour (Mwh).

Bloomberg’s analysis shows that this compares with the current costs of about £75 for constructing coal or gas-fired plants,. The price of wind, which has fallen from £70 just 12 months ago, compares with nuclear which Bloomberg assesses at £122 – the latter up on a year ago as project delays are factored in to developments. The proposed new reactor at Hinkley Point is becoming more and more non-viable as the economic case for it, which was never strong, weakens all the time.

Seb Henbest, head of Europe, Middle East and Africa at Bloomberg New Energy Finance, commented: “Our report shows wind and solar power continuing to get cheaper in 2015, helped by cheaper technology but also by lower finance costs. Meanwhile, coal and gas have got more expensive on the back of lower utilisation rates.”

The costs vary around the world, depending on local factors, but even in an era of low oil prices it seems that renewable technologies are still becoming better value than the old technologies that are damaging the biosphere. In light of these findings it is short-sighted for the UK government to be cutting subsidies for renewables – three solar power companies collapsed recently – especially as the Paris COP21 climate change conference in December is expected to push for higher environmental targets for greenhouse gas reduction, which is only possible by not extracting a considerable amount of the Earth’s fossil fuel reserves.

Luke Mills, analyst, energy economics at Bloomberg New Energy Finance, said: “Generating costs continue to vary greatly from region to region, reflecting influences such as the shale gas boom in the US, changing utilisation rates in areas of high renewables penetration, the shortage of local gas production in East Asia, carbon prices in Europe, differing regulations on nuclear power across the world, and contrasting resources for solar generation.

“But onshore wind and solar PV are both now much more competitive against the established generation technologies than would have seemed possible only five or 10 years ago.”

Bloomberg New Energy Finance

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