Renewable Cost Crown Delayed, Not Usurped

The crash in natural gas and oil prices has delayed the timing at which renewables become the cheapest power generating technologies, but the long-term trend is unstoppable. At today's record-low natural gas prices, combined-cycle gas turbines (CCGTs) have strengthened their position as the cheapest technology for new power generation in many places around the globe according to Energy Intelligence's new data on the cost of electricity generation, known as the levelized cost of energy (LCOE). But onshore wind is still cheaper than gas in Europe and long-term trends have not significantly changed from last year, even with the Covid-19 and oil crises. In the US, gas is still expected to be displaced by onshore wind and solar photovoltaic (PV) before the end of the current decade, including in mediocre sunshine and wind conditions. And even if gas prices remained as low as they are today, solar PV would beat US CCGTs by the mid-2030s -- or the early 2030s with a modest carbon price of around $20 per ton of carbon dioxide. This means that, while for the next few years existing gas-fired plants are certainly good assets to have, it will become increasingly difficult for a power generator to justify investing in new CCGTs, even on purely economic grounds.

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