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Renewables’ Price Lead Grows, But Progress is Slowing

Not only is renewable energy cheaper than fossil sources, its price lead is gaining and energy storage technologies are closing in, investment bank Lazard reports in its latest global survey comparing energy sources on an apples-to-apples basis.

“In some scenarios, the full life-cycle costs of building and operating renewables-based projects have dropped below the operating costs alone of conventional generation technologies such as coal or nuclear,” the bank’s 11th annual levelized cost of energy (LCOE) analysis found.

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According to the firm, “wind and solar costs have both fallen by another 6% in another year, with coal remaining about flat, and the cost of nuclear jumping sharply,” RenewEconomy reports. Moreover, “the gap between the costs of certain alternative energy technologies (eg. utility-scale solar and onshore wind) and conventional generation technologies continues to widen.”

“This is expected to lead to ongoing and significant deployment of alternative energy capacity,” the Australian renewable energy daily adds.

While large-scale solar leads the low-price race, nuclear costs are moving the other way, jumping 35% since Lazard’s last estimate.

The bank also released its newest measure of storage costs: the “levelized cost of storage”. In many cases, it found, lithium-ion battery storage came in “at around the same point as gas peaking plants,” with the additional benefit that “battery arrays are significantly smarter and quicker than gas generators, and can perform numerous other functions.” Among those: “avoiding spending on new poles and wires,” allowing utilities to create more resilient micro-grids, and “time-shifting the output of cheaper wind and solar”.

But Greentech Media notes an “inconvenient truth” buried in Lazard’s latest data: “While wind and utility-scale PV can now out-compete almost any conventional generation source, cost improvements for these intermittent renewables are diminishing.”

The cost of utility-scale may have dropped 86% in the last eight years, Greentech writes, and wind 67%, “but most of these reductions took place in the first four years under study.” Year-over-year, levelized costs fell about 9% for utility-scale solar from 2016 to 2017, 4% for wind.

And if Lazard is right about fossils’ growing price disadvantage, it seems the world’s biggest investor-owned oil giants didn’t get the memo, either.

“Even as governments and environmentalists forecast a peak in oil demand within a generation,” Reuters reports, “leaders of the world’s biggest oil firms are not buying the argument that their traditional business faces any imminent threat.”

The news agency analyzed investments and forecasts by the international oil majors and spoke with top oil executives. It found “mostly token investments in alternative energy. Today, renewable power projects get about 3%, or US$100 billion in combined annual spending by the five biggest oil firms, according to energy consultancy Wood Mackenzie.”

Meanwhile, BP, Chevron, Exxon Mobil, Royal Dutch Shell, and Total are “milking their drilling and processing assets to finance investor payouts now and bolster balance sheets for the future. They believe they can enter new energy sectors later by acquiring companies or technologies if and when others prove them profitable.”

Speaking for his company, Chevron CEO John Watson declared: “There is no sign of peak demand right now. For the next 10 or 20 years, we expect to see oil demand growth.”