Karen Clay, Associate Professor of Economics and Public Policy in the H. John Heinz III College at Carnegie Mellon University discusses how competitive renewable energy sources are with fossil fuels.

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Levelized cost comparisons help explain value of various electric generation technologies from the Energy Information Administration

Levelized Cost and Levelized Avoided Cost of New Generation Resources in the Annual Energy Outlook 2014 from the Energy Information Administration

Levelized Cost of Energy Calculator from the National Renewable Energy Laboratory

Transcript

HOST: Can the current price of energy influence our use of new energy technologies? On this week’s Energy Bite, Karen Clay, a professor at Carnegie Mellon University, has some answers.

CLAY: So that all forms are energy can be compared on the same basis, the Energy Information Administration computes something called the levelized cost of energy.

In its most recent analysis, the agency projects that although natural gas and geothermal energy costs will continue to be the lowest cost option available, wind power is becoming more competitive. The lowest projected levelized cost in 2019 for natural gas is 66.3 dollars per megawatt-hour and for unsubsidized wind power, it is 80.3 dollars per megawatt hour. The cost of coal, which is often considered to be one of the lowest cost fuels, is expected to be higher than both natural gas and wind at 95.6 dollars per megawatt-hour.

Hydraulic fracturing for the production of shale gas is another significant and growing user of water. In fact, almost every aspect of energy production and use has an impact on water.

HOST: What are the uncertainties in this analysis?

CLAY: A key uncertainty is the price of natural gas. At one time, the price of natural gas was much higher. With hydraulic fracturing, it is now much lower than in the past. The cost of natural gas, however, is expected to rise over time as demand for natural gas increases and more of it is accessible as new pipelines from shale gas regions are constructed. This would reduce the cost difference between natural gas and wind power, making wind power more competitive.

HOST: Were you surprised to see how close the price of wind power is to natural gas? Take our poll, see the results, and ask your energy questions at Energy Bite dot org.

ANNOUNCER: Energy Bite is a co-production between 90.5 WESA and Carnegie Mellon’s’ Scott Institute for Energy Innovation.