While renewable energy has been getting more affordable for residential installations, that has not always been the case on a commercial scale. For years, the solar and wind industries were unable to produce and convert their power at a cost equal to coal and natural gas, according to the New York Times. Fortunately, the cost of providing renewably-generated electricity to consumers has dropped drastically over the last five years and now, in some markets, it is cheaper than coal or natural gas. Still, cost hasn’t been the only obstacle for renewable energy, but that could be changing.
“The cost of utility-scale solar energy is as low as 5.6 cents a kilowatt-hour,” the New York Times reported, “and wind is as low as 1.4 cents. In comparison, natural gas comes at 6.1 cents a kilowatt-hour on the low end and coal at 6.6 cents. Without subsidies […] solar costs about 7.2 cents a kilowatt-hour at the low end, with wind at 3.7 cents.”
In New England, the New England Independent System Operator (ISO-NE) is “responsible for making sure that supply (generation) matches demand (load) at all times.” Essentially, it tells power suppliers when to put electricity into the grid and when to hold back. The producers bid into the wholesale market and the ISO selects the cheapest bids first. According to Grist.org, in order to make an energy source viable – known as “dispatchable” in the industry – it needs to meet a few criteria. In addition to being cheap, the source needs to be in reliable communication with the ISO control room and it needs to be able to have five-minute forecasts for wind strength and sun intensity. Finally, according to Grist, “it needs algorithms that will enable it to dispatch renewables when circumstances line up.” Renewable sources already meet the first two criteria and will meet the final one in the next year or two.
All this means that soon ISO-NE will treat wind, solar and hydro power sources as dispatchable, making them competitive in the New England power market. Still, experts say that solar and wind farms can’t completely replace other forms of power generation. “You can’t dispatch it when you want to,” said Khalil Shalabi, VP for energy market operations and resource planning at Austin Energy, which is why the utility still sees value in combined-cycle gas plants even though they may cost more. Nonetheless, executives were surprised to see how far solar prices had fallen. “Renewables had two issues: One, they were too expensive, and they weren’t dispatchable. They’re not too expensive anymore,” Shalabi said. And, at least in New England, they are becoming dispatchable. So can a solar, wind and hydro powered world be far behind? If it’s cheaper, probably not.