Wind, solar power plants cheaper than coal in a decade

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While met coal is clearly the star performer of the 2016 rally in mining and metals, thermal coal is probably the biggest surprise – seaborne prices are up 65% in 2016 to above $80 a tonne.

Even at today’s higher prices coal-fired power stations still represent one of the cheapest options to add power generation capacity. But according to a new blog post from top miner BHP Billiton, renewable energy sources are quickly closing the competitive gap:

On average, wind and solar energy are expected to reach cost-parity with incumbent technologies on a new-build, unsubsidised basis in about a decade. As an example, the chart below depicts the expected cost of building new wind and solar plants relative to new coal in China – the world’s largest power market.

BHP adds that in some markets with excellent solar or wind resources, such as Chile and Morocco, the tipping point has already been passed.

Wind, solar power plant costs on par with coal in a decade

Source: BHP Billiton