The growing attractiveness of the US renewables sector was again underlined last week, as a new analysis detailed how wind and solar projects in Colorado are set to undercut the cost of existing coal power even when storage costs are included.
Influential think tank Carbon Tracker published a research note last week analysing a recent Colorado filing from leading US utility Xcel Energy.
The filing, known as an Electric Resource Plan, contains over 350 proposals for new renewables projects.
Carbon Tracker said the median bid price for wind plus storage was $21/MWh and for solar plus storage was $36/MWh. “As far as we know, these are the lowest renewables plus storage bids in the US to date,” the analyst group said in a blog post.
The analysis acknowledges that several details relating to the projects “remain unknown”, but it calculated that the median bid for wind plus storage appears to be lower than the operating cost of all coal plants currently in Colorado, while the median solar plus storage bid could be lower than 74 per cent of operating coal capacity.
“Details on the bids are sparse,” Carbon Tracker said. “Crucially, the amount of storage is currently unknown. The combination of renewables plus storage bids are $3-$7/MWh higher than standalone wind and solar bids, suggesting a limited amount of storage. The capacity, if accepted, will also be online by 2023. However, as far as we know, these are the lowest renewables plus storage bids in the US to date. The previously lowest known solar plus storage bid price was $45/MWh in Arizona in May 2017.
“These changes highlight the dramatic declines in storage costs and reveal just how uncompetitive coal has become.”
The analysis came in the same week as new figures from the Federal Energy Regulatory Commission (FERC) confirmed coal use contracted last year and revealed that over the next three years 74 coal units are set to be retired across the US, with a total generation capacity of more than 20GW. In their place, just four coal units are scheduled to be built over the same period, representing just 1,927MW of capacity. It means the US will experience a six per cent net decline in its generation capacity over the period.
In contrast, projections for renewables deployment remain broadly positive, despite hostility from the Trump administration, as falling wind, solar and storage costs help drive investment in the sector.