The economics of energy generation are changing; more metrics favor solar, wind
It’s not always a simple task to compare the value of electricity generation resources. Coal, natural gas, solar, wind, and so on have different strengths and weaknesses, so when it comes time to build or replace energy capacity, economists look at the Levelized Cost of Energy (LCOE), which divides the total cost of an installation or plant by the kilowatt-hours it produces over its lifetime.
While private financial firms like Lazard calculate their own LCOE figures, the Energy Information Administration (EIA) also puts together an annual report projecting the LCOE for various generation resources. The report, released this month, looks at the cost of generation resources if they were to come online in 2019, 2022, and 2040.
The latest numbers seem to confirm trends that have borne out recently in energy markets—overall, some renewables are getting more attractive, others are struggling, and coal has definitely been unseated as king.