Whether wind power and solar energy are less expensive than other forms of energy and what are the factors? As the world seeks to shift towards sustainable and renewable sources of energy, wind power and solar energy have emerged as the leading contenders.
Both these sources of energy have been steadily gaining popularity in recent years, and are increasingly being seen as viable alternatives to traditional sources of energy such as coal, oil, and natural gas.
One of the key reasons for this shift is the potential cost savings associated with renewable energy. In this article, we will examine whether wind power and solar energy are less expensive than other forms of energy and what are the factors contributing to this.
Cost Comparison Between Wind Power And Other Forms Of Energy
As of 2023, the levelized cost of electricity (LCOE) for wind power continues to decline, making it increasingly competitive with traditional sources of energy. According to the International Renewable Energy Agency (IRENA), the global weighted average LCOE for onshore wind power was estimated to be $40-44 per megawatt-hour (MWh) in 2020. The LCOE for offshore wind power was estimated to be higher, ranging from $68-85 per MWh, due to the higher costs associated with offshore construction and maintenance.
In comparison, the LCOE of coal ranges from $54-159 per MWh, depending on the region and type of plant, while natural gas ranges from $41-74 per MWh. Nuclear power, which is still considered a low-carbon source of energy, has an LCOE ranging from $59-198 per MWh.
LCOE of new onshore wind projects installed in 2021 decreased by 15% year on year to USD 0.033/kWh, while new utility-scale solar PV decreased by 13% year on year to USD 0.048/kWh and offshore wind decreased by 13% to USD 0.075/kWh. With only one concentrated solar power (CSP) plant scheduled to come online in 2021, the LCOE increased 7% year on year to USD 0.114/kWh.
The competitiveness of renewables has improved dramatically between 2010 and 2021 as the global weighted average LCOE of newly commissioned utility scale solar PV projects fell by 88%, while onshore wind fell by 68%, CSP fell by 68%, and offshore wind fell by 60%.
It’s worth noting that the cost of renewable energy technologies, including wind and solar, have been decreasing rapidly over the past decade due to technological advancements, economies of scale, and supportive government policies. The cost of energy storage technologies, such as batteries, is also decreasing, which can help address the intermittent issue associated with wind and solar power.
As a result of these trends, renewable energy, including wind power, is becoming increasingly competitive with traditional sources of energy, both in terms of cost and reliability. Many countries and regions have set ambitious targets for transitioning to renewable energy, and there is growing investor interest in the sector, which is expected to drive further growth and innovation in the coming years.
There are several reasons why wind power has become more affordable in recent years. One of the primary reasons is the declining cost of wind turbine technology. Over the years, the cost of wind turbines has fallen significantly, due to advancements in technology, economies of scale, and increased competition in the market. Additionally, government incentives such as tax credits, subsidies, and feed-in tariffs have helped to reduce the cost of wind power for consumers.
In addition to wind power, solar energy has also become increasingly competitive with other forms of energy in recent years. The LCOE of solar energy has been declining rapidly, and in some regions, it is now cheaper than coal and natural gas. In 2020, the LCOE of solar energy was estimated to be $30-60 per MWh, which is comparable to the LCOE of coal and natural gas.
Similar to wind power, the cost of solar energy has been declining due to the decreasing cost of solar panel technology. Advances in technology, economies of scale, and increased competition have contributed to the falling costs of solar panels. Additionally, government incentives have helped to reduce the cost of solar energy for consumers.
Factors Contributing to the Lower Costs of Wind Power and Solar Energy
There are several factors that contribute to the lower costs of wind power and solar energy. These factors include:
Reduced Fuel Costs
Wind power and solar energy do not require any fuel to generate electricity, which means that the cost of energy is not affected by fluctuations in fuel prices. In contrast, traditional sources of energy such as coal, oil, and natural gas are subject to price volatility due to fluctuations in the global market. This means that the cost of electricity produced by wind power and solar energy is more stable and predictable, which can be beneficial for consumers.
Governments around the world are increasingly offering financial incentives to encourage the development of renewable energy projects. These incentives can include tax credits, subsidies, and feed-in tariffs, which can significantly reduce the cost of wind and solar energy for consumers. In some cases, government incentives have helped to make wind power and solar energy more affordable than traditional sources of energy.
Advancements in wind turbine and solar panel technology have helped to reduce the cost of renewable energy. As technology has improved, it has become more efficient and cost-effective to produce electricity from wind and solar power. Additionally, economies of scale have contributed to the declining cost of renewable energy. As more wind turbines and solar panels are produced, the cost of production decreases, which in turn leads to a decrease in the cost of electricity.
Another factor that contributes to the lower costs of wind power and solar energy is the environmental benefits that they offer. Traditional sources of energy such as coal and natural gas have significant negative impacts on the environment, including air pollution, water pollution, and greenhouse gas emissions. The costs associated with these negative impacts are not included in the price of traditional sources of energy, which means that consumers end up paying more for energy than they realize. In contrast, wind power and solar energy have very little environmental impact, which means that the costs associated with their use are lower.
Renewable energy projects can also contribute to job creation, which can help to boost the local economy. The wind and solar energy industries require skilled workers to design, build, and maintain wind turbines and solar panels. Additionally, the installation and operation of wind and solar projects require a range of other jobs, including engineers, electricians, and project managers. This job creation can help to offset some of the costs associated with renewable energy projects.
Challenges and Limitations
Despite the potential cost savings associated with wind power and solar energy, there are still some challenges and limitations to their widespread adoption. One of the biggest challenges is the intermittent nature of wind and solar energy. Wind and solar power are dependent on weather conditions, which means that they may not be available when they are needed. This can be a problem for grid operators who need to ensure a stable and reliable supply of electricity. To address this issue, grid operators need to invest in energy storage technologies such as batteries, which can store excess energy generated by wind and solar projects and release it when it is needed.
Another challenge is the initial cost of building wind and solar projects. Although the cost of producing wind and solar energy is low once the project is operational, the initial cost of building the project can be high. This can be a barrier for some developers, especially in regions where government incentives for renewable energy projects are limited.
Finally, the availability of land and suitable sites for wind and solar projects can also be a limiting factor. Wind turbines require large amounts of land, and solar panels require sunny areas with minimal shade. In some regions, finding suitable land for wind and solar projects can be challenging, which can limit the potential for widespread adoption of these technologies.
In conclusion, wind power and solar energy have become increasingly competitive with traditional sources of energy in recent years. The declining cost of wind turbines and solar panels, as well as government incentives, have helped to make wind power and solar energy more affordable for consumers. Additionally, the reduced fuel costs, environmental benefits, job creation, and technological advancements associated with renewable energy projects have contributed to their lower costs.
While there are still some challenges and limitations to the widespread adoption of wind power and solar energy, these technologies offer a promising path towards a sustainable and affordable energy future. However we have obtained our answer that is yes as governments and businesses continue to invest in renewable energy projects, the cost of wind and solar energy is likely to continue to decline, making it an increasingly attractive alternative to traditional sources of energy.