The cost of renewables is steadily catching up to the cost of natural gas and will soon beat it.
However, for geothermal and hydroelectric resources, the picture is less clear, according to Eric Lantz, an analyst at the National Renewable Energy Laboratory. The Levelized Cost of Energy (LCOE) for both types of resources have fallen to competitive levels. But both have extended development timelines that create uncertainty for investors. “It shows how LCOE is not the only condition for development,” Lantz said.
“Just like with cars,” said Ryan Wiser, a staff scientist at the Lawrence Berkeley National Laboratory, “the lowest cost is not necessarily the best buy.”
Other factors to consider include:
- Whether the resource requires new or expanded transmission investment
- Whether short-term variability or price volatility will impose some costs
- Whether incremental market values come from energy and/or capacity
