The important point is that if one already has fossil fuel plants, you have to compare the marginal cost of operating those plants vs. the full cost (including capital cost) of replacing them with renewables (CO2 costs included if any). Otherwise, they'll just keep operating the fossil fuel plants. Eventually the fossil fuel plants will age out and be replaced in an apples-to-apples comparison, but that could take decades.

Not quite. LCOE is useful building out capacity but it varies tremendously based on land availability / suitability and the feasibility of getting it into the transmission system. So these things have huge error bars. These are also about cost of producing the energy. What we need to think about is also the demand for energy. Solar is infinitely cheaper (that is, negative prices) at the ideal times. But then it’s gone entirely at others.

Gas is very good for those consistent other times. Batteries are not. Batteries are better for the excess demand during those off times. they offset the backup peaker gas plants as mentioned in the article.

All of which to say the batteries can eat away at the margins of gas plants, but it is incrementally less cost effective to replace each one.

If you operate in an environment where you can supply renewables outside of solar time in quantities high enough to not need the gas, the gas plants will become a lot less useful. Hydro power is the king here. If you don’t have that gas is still probably pretty important.

It might get to the point where a lot of these gas plants are less profitable because they expected to be more relevant and will not be able to justify their fixed costs. But shutting down those plants is probably more expensive to society than just subsidizing them to stay open.

So it’s complicated. The energy and battery side of the inflation reduction act has been HUGE though. Society doesn’t really get how much of an important investment the Biden admin has done here