Wind energy is as cheap as natural gas, and solar isn’t far behind

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Getty Images

A report by Bloomberg New Energy Finance validates predictions that renewable energy is a better long-term investment when it comes to energy.

The report analyzed 55,000 projects across the world to have a global comparison using a technique called “levelised cost of electricity.” This method factors in interest rates, capital expenditures, and the operating costs of facilities. The results are then used to compare different energy sources on a dollar value.


The global average cost of onshore wind energy for the second half of 2015 will be $83 per megawatt-hour of electricity, already down $2 from the first half of the year. Thin film solar photovoltaics has a higher cost of $122 per megawatt-hour, but also have a bigger price drop of $7 compared to the first six months of 2015. When looking closer the local numbers differ but show the same trend.

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Coal-fired electricity costs $75 per megawatt-hour in North and South America (up $8 per megawatt hour). In Europe, the cost is higher at $105 for the same amount. And gas-fired electricity costs $82 in the Americas, on average (an increase of $6 per megawatt hour), and $118 in Europe. This higher cost of fossil fuels in energy production for Europe is mainly because of government mandated policies. That makes the case for renewables even stronger when you look at an average costs of $80 and $85 per megawatt hour in Germany and the UK respectively for wind. Compared to both countries having a cost of over $100 per megawatt hour for coal and gas combined. This is not so obvious when looking at China or the US yet. In China coal-fired electricity production costs only $44 per megawatt-hour, whereas wind costs $77 and solar $109. It is similar in the US where gas- and coal-fired electricity is about $65 per megawatt hour, compared to wind at $80 and solar at $107.

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While these prices are still higher than non-renewables, the recent price drops indicate that as the technology matures, more and more electricity can be generated from wind and solar as prices will continue to fall. It should also be noted that the majority of the cost of renewables is up-front; the construction, installation and the start of energy harvesting. Once this phase is over, renewables do not require fuel to keep going which means that wind and solar can continue getting cheaper. Or as Seb Henbest,head of the Europe, Middle East, and Africa analysis for Bloomberg New Energy Finance, put it: “You start to go from a world where renewables are expensive, to a world where renewables are actually cheap. And that’s very meaningful.”

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