How wind and solar became America’s cheapest energy source

In late 2009, as America was clawing its way from the worst recession in 80 years, fiscally pressured local and state governments were doing everything they could to slash costs. That included cutting back on clean-energy initiatives. Here’s how the New York Times described the case of Durango, Colorado, a town of 18,000 in the southwest part of the state:

But for many other groups, even green-minded ones, the higher price of clean electricity has caused soul-searching and hesitation. Early this year, the city government of Durango, Colo., stopped buying renewable power from its utility, saving $45,000 a year. The clean electricity had cost 40 percent extra.

Ten years later, nearly one-third of Colorado’s electricity comes from renewable sources, the state’s biggest utility is moving to entirely carbon-free energy, and its voters have elected a governor who promised to set the most aggressive clean-energy standard in the nation.

That story is mirrored in dozens of other states, where consumers have demanded cheap power and corporations have moved into clean-energy projects in droves. Behind this shift is not just increasing environmental awareness, but simple economics. The price of renewables has been dropping exponentially—and shows no sign of reversing.

Rapid price drops

In most of the U.S. today, it’s cheaper to build a new solar or wind farm than to simply keep an existing coal plant running. Most of those cost decreases have happened just in the last 10 years, to the surprise of some energy analysts.

Part of this is technological improvement—solar panels and wind turbines have gotten steadily more effective at generating power. But most of it is economies of scale, said Rushad Nanavatty, principal at the Business Renewables Center at the Rocky Mountain Institute, a sustainability think tank.

“When renewables get cheaper, we buy more, and then they get even cheaper and we buy even more,” Nanavatty said. “When you’re talking about wind and solar, the cost declines are driven mainly by manufacturing volumes and the cost declines that come with it.”

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