Economics of providing electricity to consumers using wind & solar has changed in the last year with soaring natural gas prices .
Then a few years ago, the dramatic decreases in both wind and solar cost of electricity generation led to renewable sources being as cheap as or cheaper than fossil generation in many places. This worked fine to encourage some limited renewable projects. But utilities still had to deal with the substantial disadvantage that solar only worked in the day and wind power could be intermittent in places where the wind resources vary from day to day.
In Florida, inflation has unfortunately increased the price of producing electricity in all the alternatives. But it has not affected all forms of electricity generation equally. Natural gas generation has been affected by inflation to a much greater degree than solar and wind.
Until recently, it was not logical to decommission good working power plants with usable life , even though it did mean investing more in new-build renewable power plants. Since many plants are designed to last 30 years, that means you’re only replacing about 3% of your power plants per year. Add to that the fact that you have another 2% population grown and 2% of additional demand from electric vehicles and the electrification of homes.
I think we all know that wind, solar, and battery backup have very low operational costs. Why? Because they have no fuel costs. And the people costs are relatively low, since there isn’t much to do with solar other than wash off the panels occasionally. What costs a lot for wind, solar, and batteries is the cost to buy and install them. Once they’re installed, they are very cheap to run.
It depends if people are convinced that these natural gas prices will stay elevated or if the high prices are transitory. My view is the drilling activity is still quite low, so prices are likely to stay quite high for a considerable period of time. Of course, even if you want to replace all those legacy plants with wind and solar, it will take many years to do it. Regardless, today marks a significant milestone in the renewable energy transition.
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