Central vs. Local Supply
Charles Bayless recently retired as President and Provost of the West Virginia University Institute of Technology. Previously he was Chairman, President, and Chief Executive Officer of Illinova Corporation and its wholly owned subsidiary, Illinois Power Company. Prior to joining Illinova Corporation, he was Chairman, President, and Chief Executive Officer of Tucson Electric Power Company.
“There is a theory which states that if ever anyone discovers exactly what the Universe is for and why it is here, it will instantly disappear and be replaced by something even more bizarre and inexplicable. There is another theory which states that this has already happened.”
— Douglas Adams, “A Hitchhiker’s Guide to the Galaxy”
Listening to pricing claims by renewable and central station advocates about which is cheaper could easily lead one to believe that Adams was right, and the universe, or at least the electricity pricing part of it, is bizarre and inexplicable.
Who is right? Which is cheaper – the grid or renewables? Short answer: they both are.
Renewables are cheaper than the existing grid in some instances, and the grid is cheaper than renewables in others, but the break-even point is constantly shifting towards renewables. In the end, both will win. The cheapest configuration will be grid-connected renewables.
If you look at only the lifecycle cost of energy from new units, the cost of renewable electricity is usually cheaper, or will shortly be cheaper, than the cost of the electricity generated by a central station.