Battery-backed wind and solar projects — so-called “near-firm renewables” — will be cheaper to operate than most conventional power plants by 2025, according to the chief executive of one of the world’s largest renewables developers, US-based NextEra Energy.
In a year-end earnings call on Friday, Jim Robo predicted that new near-firm wind projects will have a levelised cost of energy (LCOE) of $20-30/MWh, with near-firm solar at $30-40/MWh within five years.
“At these prices, new near-firm renewables will be cheaper than the operating cost of most existing coal, nuclear and less efficient oil- and gas-fired generation units,” he said. “We will be at the vanguard of building a sustainable energy era that is both clean and affordable, and we are driving very hard to continue to be at the forefront of the disruption that is occurring within the energy sector.”
“Near-firm” means that the renewables plants would be close to being able to provide power around the clock, much like a baseload coal-fired or gas-fired power plant.
NextEra has just over 15GW of wind power and 2GW of solar in operation, and has contracted to add a further 4.7GW of wind and 4.4GW of solar by the end of 2022, as well as about 900MW of battery storage. These additions could rise to 7.8GW of wind and 7.3GW of solar if more contracts are signed, according to the financial results.
“Our confidence in renewables being the low-cost generation alternative in the middle of this decade remains stronger than ever,” said Robo. “We expect the disruptive nature of renewables to be terrific for customers, terrific for the environment and terrific for shareholders by helping to drive tremendous growth for this company over the next decade.”
