LNG Versus Solar Power: What is the Best Option for Island Power Markets?

Wood MacKenzie [free download with Scribd registration]

[Axios] A new analysis from the consulting firm Wood Mackenzie compares the costs of using solar power and liquefied natural gas to replace the petroleum fuel, mostly diesel, that currently supplies power to several thousand islands worldwide.

What they found: LNG, and systems that combine solar and LNG, would already be cheaper on average (though it takes some time to recover up-front capital costs)…

Why it matters: Moving away from burning diesel has the potential to reduce costs in island regions where consumers pay high power prices, and also would bring environmental benefits. It’s an especially relevant topic as Puerto Rico and other islands must repair and rebuild power networks after devastating storms.

One level deeper: Here’s what they envision in 2025 based on modeling that assumes oil prices rise to $68-per-barrel, and solar and battery costs keep falling by 17% and 49% respectively.

  • “The solar + Li-ion battery only solution would become increasingly competitive, achieving lower [levelized cost of electricity] than continuing to burn oil products. But while this solution would have a zero carbon footprint, it would remain over 50% more expensive than the LNG only solution or the solar + LNG solution, unless battery costs fall significantly below US$100/MWh. We think this is unlikely to happen ahead of 2030.”

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