The costs of renewable energy installations, including storage, has fallen precipitously:
Proposals for renewable electricity generation in Colorado are coming in cheap, like, $21/MWh-cheap for wind and battery storage. Though there are a few caveats to those numbers, federal incentives and quickly falling costs are combining to make once-quirky renewable projects into major contenders in an industry where fossil fuels have comfortably dominated since the 19th century.
Early last year, Colorado energy provider Xcel Energy requested proposals for new electricity generation. Specifically, the company needed 450 megawatts of additional generation to meet future demand. In a separate request called the Colorado Energy Plan, Xcel said (PDF) it would consider replacing two coal plants providing 660MW of capacity with “hundreds of megawatts of new wind and solar as well as some natural gas-fired resources” if new resources could be found cheaper than what those coal plants cost to operate (including costs to shut down the plants early).
By late November, energy companies had submitted their best offers. Although exact details of the offers aren’t available yet, Xcel Colorado was required to make public a summary of the proposals (PDF) in the month after the bids were submitted.
Still, the prices quoted were encouragingly competitive. Although Xcel’s report doesn’t have a lot of details, this is what we know:
- Out of 152 standalone solar bids, the median bid price was $29.50/MWh.
- Standalone wind received the second-most bids from potential developers (that is, 96), and the median bid price was an astonishingly low $18.10/MWh. That’s on the same level as a record-low $17.70/MWh bid put forward in Mexico in November.
- 87 bids were placed to develop solar-plus-storage installations, with a median bid of $36/MWh. Still, we don’t know what kind of storage was proposed or how much of it was proposed. If you have a giant solar field sending electricity to the grid as it gets made, and a small battery installation to manage frequency regulation or serve a local community for an hour of downtime, that’s not terribly exciting. This median price is down from a previous competitive price of below $45/MWh signed by Tucson Electric.
- 11 bids were placed to build wind-with-storage at a median bid of $21/MWh. The same problem with evaluating Xcel’s solar-and-storage bids is present in the reported wind-and-storage bids: without more detail, it’s hard to evaluate how much storage comes with that.
- Seven bids suggested a combination wind, solar, and battery storage installation, with a median price of $30.60/MWh.
- Five bids suggested combining solar and wind for around $19.90/MWh.
A few more traditional, dispatchable technologies were proposed as well, but Xcel asked bidders to price these out in terms of dollars per kilowatt-month ($/kW-mo). That unit of measurement is considered capacity pricing, or pricing for electricity that’s generated when demand exceeds a certain point, so it’s not quite comparable to the $/MWh seen above.
Among those resources, combustion turbines came in at $4.80/kW-mo, and combustion turbines with battery storage came in at $6.20/kW-mo. For context, in a 2010 paper (PDF), New England’s grid saw a $4.50/kW-mo bid for more traditional fossil fuel generators.
Renewables are still more expensive to install, but the differential is falling quickly.