The CEO of TotalEnergies believes that the renewable transition will lead to higher—not lower—energy prices. That’s a very different view from the popular belief that renewable energy prices are falling so fast that electric power will become ever-cheaper.
“We think that fundamentally this energy transition will mean a higher price of energy.
“I know that there is a theory which says renewables are cheaper, so it will be a lower price. We don’t think so because a system where you [have] more renewable intermittency is less efficient . . . so we think it’s an interesting field to invest in.
Many energy analysts and renewable promoters see things differently.
“Renewables are by far the cheapest form of power today.”
La Camera’s statement is based on a 2021 report by IRENA (International Renewable Energy Agency) that evaluated the levelized costs for renewable energy sources. The problem is that IRENA’s study only evaluated generation costs and did not account for electric power backup and storage costs. Since wind and solar are intermittent sources of electricity, the cost of natural gas backup or battery storage must be included in their levelized cost.
Lazard published a report in 2023 that includes backup and storage costs. The data indicates that electric power costs from wind and solar are about 21% more than from combined-cycle natural gas and 44% more than from coal (Figure 1). At first glance, that doesn’t seem like an unreasonable premium to pay for cleaner electric power.
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