By George Harvey
The declining costs of solar photovoltaics (PVs) and wind turbines have had effects on the entire energy market. These are clear in data from the Federal Energy Regulatory Commission. The FERC says that in the first quarter of 2016, 98.6% of all new utility-scale generating infrastructure installed in the United States was renewable. Wind power was the most important, taking 54% of the total, while solar power was second, at 39.9%. New natural gas infrastructure came to an astonishingly small 1.4%.
We should bear in mind that these figures are only for utility-scale infrastructure. Small scale PV installations typically make up 40% or more of solar capacity additions. If that is the case for the first quarter, then over half of new generating capacity for the period was solar.
Fossil fuel installations are increasingly giving way to renewable power. In the past few years, coal-burning electric generation has been in serious decline. In 2013, coal saw 1543 megawatts (MW) of new capacity added. This dropped to 166 MW in 2014, and only 3 MW in 2015. So far there has been none this year.
Cheerleaders for the natural gas industry have claimed credit for the decline in coal’s fortunes. They pointed to the fact that new natural gas infrastructure additions grew from 7378 MW in 2013 to 9424 MW in 2014. The growth has turned out to be unsustainable, however. There was a large decline to 5952 MW in 2015. And only 19 MW of new natural gas capacity went online in the first quarter of 2016.
The German state of Mecklenburg-Vorpommern
produces 130% of the electrical energy it needs
from renewable sources. Boris Schucht, the CEO
of 50Hertz, the grid operator dealing with that
renewable power, says the grid can be 70% made up
of solar and wind power without any need for storage.
To be honest, we can be sure that the first quarter will not be typical for 2016. The outlook for natural gas is that about 4,000 MW of natural gas will be installed over the summer, along with a 1,150-MW nuclear reactor, the first in the United States in over twenty years.
Nevertheless, despite any summer additions to natural gas capacity, the sun and wind are projected to outperform it handily. Government and industry sources project 4,000 MW to 5,000 MW for new solar capacity and 5,000 MW to 8,000 MW for new wind power.
The driving force behind this is partly a gradual reduction in the costs of new renewable generating capacity and the subsequent reduction in prices for power that capacity produces. It is partly that renewable capacity can be quickly and inexpensively set up. Since this is often done at the facilities that will consume the power, renewable energy reduces transmission line costs, and this further reduces electricity prices.
Computerized resource and load management has proven that solar and wind can be more reliable sources for producing energy on demand than thermal plants, including nuclear, coal, and natural gas. That is true on a smart grid, even without storage. The costs of energy storage are in steep decline, enabling micro-grids with better security and resilience. And solar and wind power both share one highly competitive edge, which is that the fuel costs never increase.
The reduction in costs for solar and wind power is reflected in recent bids for power purchase agreements. In places where incentives and subsidies are small or non-existent the costs have become stunningly low. A recent power auction in Mexico produced prices of power that were below $40 per megawatt hour (MWh) for both solar and wind power, handily beating bids for natural gas capacity. In Dubai, one bid for a solar power purchase agreement covering 800 MW was below $30/MWh. In the United States, the incentives have an effect on the bids, but even combining them with the bid costs, the result is about $45.50/MWh for the average price of wind-generated electricity in 2014.
News of upcoming initiatives highlights the increased attractiveness of renewable power even more. MidAmerican, a subsidiary of Berkshire Hathaway, has announced plans to invest $3.6 billion in new wind farms in the Midwest, with a goal of producing 85% of its electricity from renewable sources by 2020. As impressive as this is, however, it is overshadowed by the long list of big businesses in the Renewable Energy Buyers Initiative. They are pushing to install 60,000 MW of their own new renewable capacity by 2025.