Whether it comes out of the ground or from the sky, energy production remains a hot topic in Colorado. Each side has its own set of arguments, but we may be reaching a true tipping point in favor of renewable energy.
As Tom Randall writes for Bloomberg Business, the “capacity factor” is making solar and wind energy more economically-viable than other sources of energy:
Wind power is now the cheapest electricity to produce in both Germany and the U.K., even without government subsidies, according to a new analysis by Bloomberg New Energy Finance (BNEF). It’s the first time that threshold has been crossed by a G7 economy.
But that’s less interesting than what just happened in the U.S.
To appreciate what’s going on there, you need to understand the capacity factor. That’s the percentage of a power plant’s maximum potential that’s actually achieved over time…
…One of the major strengths of fossil fuel power plants is that they can command very high and predictable capacity factors. The average U.S. natural gas plant, for example, might produce about 70 percent of its potential (falling short of 100 percent because of seasonal demand and maintenance). But that’s what’s changing, and it’s a big deal.
For the first time, widespread adoption of renewables is effectively lowering the capacity factor for fossil fuels. [Pols emphasis] That’s because once a solar or wind project is built, the marginal cost of the electricity it produces is pretty much zero—free electricity—while coal and gas plants require more fuel for every new watt produced. If you’re a power company with a choice, you choose the free stuff every time.
In any political debate, simple economic factors can end up making the strongest argument. All of the saber-rattling and fist-shaking about fossil fuels and renewables will grind to a halt when oil and gas production is no longer economically preferable…and it appears we may be crossing that bridge.