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September 22, 2020

The costs of renewable energy and battery storage have plummeted, just as most old coal plants need to be replaced.

As the harm from climate change becomes increasingly manifest, there is some good news: The estimated cost of reducing carbon emissions is falling rapidly. One dramatic example is an analysis by Geoffrey Heal of Columbia University showing that it would cost only $6 billion a year for the U.S. to move to carbon-free electricity generation by 2050.

Even if the precise numbers are off, Heal is right to emphasize that the transition to cleaner energy is much less costly today than it used to be. Three forces are changing the math.

First, renewable power costs are dropping so fast, both utility-scale solar and onshore wind power have become cheaper than natural gas or coal power, as Lazard’s levelized-cost-of-energy estimates from 2019 show. As I wrote when these numbers came out, multiple forces have driven costs down, including ongoing improvements in technology and lower capital costs. (In November, Lazard will have updated estimates of the cost of various energy technologies.)

Second, the cost of storing renewable energy is also falling. Read more