Dramatic cost reductions for wind, solar and battery technologies are posing an 'unprecedented challenge' to coal and gas and their position as leaders in the world electricity mix, according to new research from Bloomberg New Energy Finance (BNEF).
BNEF's analysis investigates the levelised costs of electricity for all the leading electricity technologies, and finds that fossil fuel power faces increasing competition in all three roles it performs in the energy mix - the supply of bulk generation, the supply of dispatchable generation and the provision of flexibility.
Elena Giannakopoulou, Head of Energy Economics at BNEF, described the research as 'chilling' for the fossil fuel sector.
'Some existing coal and gas power stations, with sunk capital costs, will continue to have a role for many years, doing a combination of bulk generation and balancing, as wind and solar penetration increase. But the economic case for building new coal and gas capacity is crumbling as batteries start to encroach on the flexibility and peaking revenues enjoyed by fossil fuel plants,' she said.
Extract from Energy World magazine (published by The Energy Institute), May 2018 edition, page 4.