This cost reduction is part of a wider trend of LCOE prices for alternative energy technologies continuing to decline in the US, according to analysis by asset management firm Lazard.
In some cases, the full-lifecycle costs of building and operating renewables-based projects have dropped below the operating costs alone of conventional generation technologies such as coal or nuclear, the analysts concluded
This trend is expected to lead to ongoing and significant deployment of alternative energy capacity, Lazard added.
Onshore wind this year typically cost between $30/MWh and $60/MWh in the US, according to Lazard’s analysis, down from between $32/MWh and $62/MWh in 2016 — a fall of 6.25%.
Even the high end of this spectrum is cheaper than all conventional generation technologies included in the analysis, except for combined-cycle gas turbine plants (CCGT).
With a subsidy such as the production tax credit (PTC), however, the levelised cost of onshore wind can fall even further, to between $14/MWh and $52/MWh, Lazard analysts found.
The bottom end of this range is less than half the cost of the next cheapest subsidised energy source — thin-film, utility-scale solar PV at between $35/MWh and $38/MWh.
Unsubsidised LCOE comparison - credit: Lazard
The US’ nascent offshore industry, however, is found to be more expensive — a midpoint for offshore LCOE was estimated at $113/MWh.
But, this is still cheaper than the midpoints for a diesel reciprocating engine ($239/MWh), gas peaking plants ($183/MWh), an integrated gasification combined cycle (IGCC) ($163.50/MWh) or nuclear ($147.50/MWh).
"The growing cost-competitiveness of certain alternative energy technologies globally reflects a number of factors, including lower financing costs, declining capital expenditures per project, improving competencies and increased industry competition," said George Bilicic, vice chairman and global head of Lazard’s power, energy and infrastructure group.
"That said, developed economies will require diverse generation fleets to meet baseload generation needs for the foreseeable future."
Lazard’s analysis also shows the gap widening between certain alternative energy technologies — especially utility-scale solar and onshore wind — and conventional generation technologies.
The cost of the latter often remained flat (coal) or increased (nuclear) — reflecting increased capital costs at various nuclear facilities currently under development.
However, alternative energy systems alone will not be capable of meeting the baseload generation requirements of a developed economy, the analysts concluded.
This is despite the energy storage industry holding "great promise" and despite the expectation that costs to decrease significantly over the next five years due as the scale of storage systems expands.
"Therefore, the optimal solution for many regions of the world is to use complementary conventional and alternative energy resources in a diversified generation fleet," the report’s authors concluded.