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Electricity from wind can be cheaper than coal or gas
2018-08-01

The production costs for electricity in new onshore wind farms or solar power plants can already successfully compete with the electricity generated from coal or gas-fired power plants. Such findings were announced in a report by Sandbag, a think tank operating in Brussels and London, which was quoted by Wind Power Monthly.

Furthermore, the cost of the electricity generated from coal and gas has increased significantly since the beginning of 2017, by 72 percent to 46 EUR/MWh and by 43 percent to 49 EUR/MWh, respectively. This change has been strongly influenced by the rising emission allowances, with prices reaching over 20 EUR/t at the end of August for the first time since 2008.

At the same time, the electricity generation in solar and wind power plants is becoming cheaper. In Germany, at the auction in August, the lowest price quoted for the construction of wind farms was only 40 EUR/MWh (the average price at the auction was 61.10 EUR/MWh), and the lowest price offered for solar power plants at the auction in July was 38.90 EUR/MWh (the average price at the auction was 45.90 EUR/MWh). 

Sandbang also points out that the costs of generating electricity from coal or gas fired power plants can be even higher in reality. In the study, it is calculated solely on the basis of the raw material and the emission allowances. In recent years, the emissions allowance prices have increased by four times, while the coal and gas prices in Europe have risen by over 30 percent.

Carbon Tracker predicts that the emission allowance prices will continue to increase – by the end of this year they could reach 25 EUR/t, and by next year they may even become 35 EUR/t.