Wind and solar have become the cheapest sources of power, and natural gas-fired plants are the best option to back them up, according to Lazard Ltd.
The levelized cost of energy(LCOE) from large solar installations has fallen to as low as $36 per megawatt-hour, while wind is as cheap as $29, Lazard said in a report Thursday. That’s cheaper than the most efficient gas plants, coal plants or nuclear reactors.
Even as renewables become cheaper, gas plants remain a competitive way to balance out intermittent output from wind and solar, George Bilicic, Lazard’s global head of power and energy, said in an interview. Coal and nuclear, on the other hand, are struggling to stay afloat, he said.
“We continue to see this battle being fought,” Bilicic said. While grid-scale energy storage might someday be the ideal back up for wind and solar farms, the technology remains far too expensive to be practical, he said.