Competition is key to reduce renewables cost

Competition is key to reduce renewables cost

Feb 1, 2019
Image credit: distel2610 via pixelbay
Friday, February 1, 2019

Solar, wind and other renewable energy sources long thrived with the help of subsidies. Those days are coming to an end, wrote Nandita Parshad, managing director for energy and natural resources at the European Bank for Reconstruction and Development, or EBRD, in a World Economic Forum essay.

Competition is now reducing the cost of renewable energies, Parshad said.

Parshad’s bank wants the world to double the use of electricity for vehicles, heating and businesses that now use carbon-based fuels while generating more than 70 percent of that electricity from wind, solar and other green sources.

Those goals will likely occur when many players force down prices, she believed.

“Renewables are now cost-competitive with fossil fuels in many parts of the world, even taking into account the subsidies that continue to prop up power generation from fossil fuels,” wrote Parshad.

In Jordan, for example, with the help of EBRD investments, competition has cut renewable energy prices by 85 percent. They are now cheaper than natural gas. As more solar projects have come online in the desert kingdom, the price per kilowatt hour has fallen from $0.17 (€0.15/CHF0.17) in 2014 to $0.025 (€0.022/CHF0.025) last year.

Similar trends are occurring in Eastern Europe, Egypt and elsewhere.

“We believe that renewable producers need a long-term commitment from consumers to buy their power at a fixed price — but that prices must be set competitively,” said Parshad.

Image credit: distel2610 via pixelbay