We’ve been thinking some big changes were coming to energy, mostly because of application of ICTs and concern about excessive centralization. But could this accelerate everything?
According to a study by the investment banking firm Lazard, the cost of utility-scale solar energy is as low as 5.6 cents a kilowatt-hour, 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, the firm’s analysis shows, solar costs about 7.2 cents a kilowatt-hour at the low end, with wind at 3.7 cents.
“It is really quite notable, when compared to where we were just five years ago, to see the decline in the cost of these technologies,” said Jonathan Mir, a managing director at Lazard, which has been comparing the economics of power generation technologies since 2008.
Mr. Mir noted there were hidden costs that needed to be taken into account for both renewable energy and fossil fuels. Solar and wind farms, for example, produce power intermittently — when the sun is shining or the wind is blowing — and that requires utilities to have power available on call from other sources that can respond to fluctuations in demand. Alternately, conventional power sources produce pollution, like carbon emissions, which face increasing restrictions and costs.
3 Comments
Rohan Samarajiva
A Sri Lankan (and regional) expert raises some important questions: “Is it levelized cost, life cycle costs, what is the discount rate, etc. I wonder whether any investors take advice from this firm Lazard. True RE prices are down, but only true market prices and a project financial model can give you what the prices are. For that, need to establish a financial model of a real-life project, with all costs included. Then the issue is how much of RE can be absorbed into the grid, for which you need to do a dispatch model, check dispatches and then check system stability as well. Its only up to that level RE, even at zero cost, can be used. Then comes the need for spinning reserve and inertia to overcome intermittency.”
Shantha
If we are to find the true cost of RE, I would suggest to create “Open Access” in transmission and distribution networks. Then RE generators and buyers will find the appropriate price through negotiations. Instead of developing financial model which is to be included “All Cost”. Do we know all cost to be included in a model? I am of the view that “Market is more efficient than those models”. This will further enable that green attribute of RE be separated and capitalized by the industrialist who produce goods to the international market.
Support to finetune effort to reform Sri Lanka electricity industry
LIRNEasia is known for its work on ICTs, but it works on all infrastructures. Electricity is an area we have done considerable work in.
How can affordable electricity be assured 24×7?
Today’s problems are not caused by delays in building additional generating capacity; they are caused by the lack of dollars to provide fuel for the existing generating plants.
LIRNEasia at “ICT in Rural Development” Conference organized by Indonesia ICT Ministry
The 2nd International Conference on ICT for Rural Development (IC-ICT RuDev) by the Centre of Research and Development on Informatics Applications and Public Communication, Ministry of Communication and Informatics of the Republic of Indonesia will be held in Jakarta during 27th -28th October 2021.
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