Falling Battery Costs Making Solar Cheaper Than Gas

Solar farms have been more costly to deliver electricity than natural gas or coal because of the cost of storage and downtime at night, However that is changing with the falling cost of batteries a recent report shows.

Solar farms have been more costly to deliver electricity than natural gas or coal because of the cost of storage and downtime at night, However that is changing with the falling cost of batteries a recent report shows.

Solar Farm StoragePictured storage at a solar farm in Lyon

In an interview with Bloomberg analyst Hugh Bromley at BNEF said solar projects that incorporate storage are getting cheaper to build per megawatt-hour in parts of the U.S. Southwest than new gas-fired generation. Head added “This won’t be contained to the Southwest, this is spreading and will continue to spread.”.

Utilities have supplanted their electricity from solar farms during the day with natural gas-fired generators past nightfall. However the increasing affordability of batteries, because of two factors, falling lithium prices and federal incentives. These are making solar more attractive in both cost and removing switching associated with switching.

The reports cites as an example a 100-megawatt solar farm that goes into service in Arizona in 2021, coupled with a 25-megawatt storage system with four hours of capacity, will be able to provide power for $36 a megawatt-hour, according to BNEF. That’s well below the $47 price from a new combined-cycle gas plant, according to the report.

In March Elena Giannakopoulou, head of energy economics at BNEF, said: “Our team has looked closely at the impact of the 79% decrease seen in lithium-ion battery costs since 2010 on the economics of this storage technology in different parts of the electricity system. The conclusions are chilling for the fossil fuel sector.”

“Some existing coal and gas power stations, with sunk capital costs, will continue to have a role for many years, doing a combination of bulk generation and balancing, as wind and solar penetration increase. But the economic case for building new coal and gas capacity is crumbling, as batteries start to encroach on the flexibility and peaking revenues enjoyed by fossil fuel plants.”

Source: Bloomberg

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