Wind and solar energy are the cheapest form of new electricity in most places in the world. This is shown by a study by Bloomberg New Energy Finance (BNEF).
According to the BNEF researchers, there will be a tipping point in 5 years, at which it will be more expensive to operate an existing coal or natural gas power plant than to build new wind or solar parks.
Bloomberg’s findings are in line with the conclusions of the International Energy Agency, which stated that solar energy is beginning to take over from coal as the cheapest form of electricity..
The BNEF researchers do, however, have a comment on the advance of sustainable energy. There is an economic limit for the growth of wind and solar energy. According to Chief Economist Seb Henbest, every country will reach a point of saturation as the technology no longer cuts generation costs compared to operating the existing thermal generation fleet.
70 to 80 procent
Those restrictions suggest that renewable energy sources will not win more than 70 to 80 percent of the electricity generation market, depending on local conditions, according to Henbest. Even in Europe, which Henbest says has some of the strictest policies to encourage renewables and discourage fossil fuels, wind and solar are unlikely to exceed 80 percent of supply.
“That level of penetration is not near in virtually every market we look at,” Henbest said in a presentation outlining the initial findings of BNEF’s New Energy Outlook due out later this month. “We will not reach these limits anytime soon and we can of course exceed these limits.”
Coal most inefficient
In electricity generation, BNEF estimates that coal is one of the most inefficient ways to generate electricity. This is because 65 percent of the energy is lost during the combustion of the fuel. The energy that is lost when generating electricity from wind energy, for example, is almost 0.
The result, according to BNEF, is that if renewable energy sources get a larger share in the energy mix, less energy will be needed to generate the same amount of electricity. “If we use renewable energy sources to generate electricity, this translates into perhaps 2 to 3 times less primary energy supply.”