Monday, February 27, 2012

New Coal Plants Now More Expensive Than New Renewables

 For years renewable energy has been more expensive than coal.  Not anymore. 

New renewable energy--wind, biomass, landfill gas, digesters, hydro--now costs less than a new coal plant.  Don't believe it?  That is the finding of the Michigan Public Service Commission that quietly released on February 15th its statutorily required report to the Michigan legislature about the cost of meeting Michigan's 10% Renewable Standard.  See the details at:
http://www.michigan.gov/documents/mpsc/implementation_PA295_renewable_energy2-15-2012_376924_7.pdf.

Looking at the actual prices bid to build new renewable energy plants, especially for its two biggest electricity utilities (Consumer Energy and Detroit Edison), the Michigan regulators found:

1. new wind plants from 2008-2011 on average cost 8.76 cents per kilowatt-hour;
2. new biomass cost 9.89 cents per kilowatt-hour;
3. new landfill gas cost 9.81 cents per kilowatt-hour;
4. new digester power cost 12.2 cents per kilowatt-hour. 

The average renewable energy cost was 9.19 cents per kilowatt-hour for the entire 3 year period and would be even lower if only 2012 prices were included.

By comparison, the cost of new advanced-supercritical coal-fired plant for a life cycle of 40 years is 13.3 cents per kilowatt-hour, according to the Michigan PSC. 

And where are renewable energy prices headed?  The Michigan PSC states "...that the average levelized costs of the [renewable energy] contract continue to decline" and that "contract prices have been much lower than expected."  Indeed, the renewable energy prices are lower in 2012 than in  2011, 2010, 2009, or 2008.  Consequently, the prices expressed in the Michigan PSC report overstate the price of renewable energy in 2012. 

Gas is certainly remaking the energy marketplace, but it is not alone in doing so.  Renewable energy and its sharp price drop is an equally profound change, making both gas and renewable energy the dominant fuel sources for the next 20 years.

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