How Renewables are Winning - Report
 

How Renewables are Winning - Report

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Renewable energy, including wind and solar power, has experienced explosive growth in recent years with no sign of slowing down. Read our special report, How Renewables are Winning, to learn more ...

Renewable energy, including wind and solar power, has experienced explosive growth in recent years with no sign of slowing down. Read our special report, How Renewables are Winning, to learn more about this rapid period of renewable energy advancement.

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How Renewables are Winning - Report How Renewables are Winning - Report Document Transcript

  • A Renewable Choice Energy Special Report: How Renewables are Winning INTRODUCTION It’s been an interesting year for renewable energy. Sensitivity to climate change is at an all-time high thanks to severe weather events such as massive, widespread drought and Hurricane Sandy; even long-term climate change naysayers have begun to change their tune. Earlier this summer, global carbon dioxide (CO2) levels reached concentrations not seen on our planet since the Pliocene period.1 This announcement came on the heels of reports that total U.S. emissions are at their lowest levels since 1994 and are expected to continue to fall as more natural gas and renewable energy comes online over the next several decades. 2 Thanks to the extension of the Production Tax Credit (PTC) at the end of 2012, we are building new sources of renewable energy at record rates; for example, in January, 100% of the new capacity added to the U.S. electrical grid was from renewable sources3 and renewables accounted for 25% of all new electricity generating capacity installed in the first six months of 2013.4 And in June, President Obama announced the details of his much anticipated Climate Plan, which includes aggressive targets to double renewable energy generation by 2020.5 The data all points to a promising shift: a progressive, and perhaps final, push to eliminate our dependence on carbon-based fuels. Any way you look at it, renewables are winning. A NEW ENERGY PARADIGM The ability to harness energy in order to generate electricity is arguably one of the most important discoveries ever made by humankind. Without electricity, there would be no industrial age, and certainly no digital one. Year over year, our global energy demands increase without pause, and as the global population continues to grow and advance, so will our appetite for energy. Since the Industrial Revolution, we have depended on energy-rich, carbon-based sources of fuel: wood, coal, petroleum, and natural gas have all been widely abundant, reasonably priced, and highly valued for their ability to burn quickly and at temperatures intensive enough to support our demands. However, none of these energy sources is clean; the destruction of carbon-based fuels generates air pollution in the form of gases and particulate and releases climate-damaging greenhouse gases (GHGs) including CO2, methane, and ozone. These same fuel sources are notoriously dangerous, highly controversial, rigorously controlled by a wealthy few, and the source of tremendous human and planetary suffering. And, ultimately, they are finite; while no one knows for sure when we’ll run out of oil, it is generally agreed upon that someday we will.6 As a result, utilities, businesses, and governments around the globe are turning to renewables as a solution to our energy challenges. Renewable energy comes from sources that are readily or continuously replenished, including sunlight, wind, running water, tidal waves, and geothermal heat. The use of renewables is associated with a reduction in GHGs and pollution and an increase in domestic energy reliance and job creation. Renewables also provide a dependable source of energy to rural and remote areas, where economic prosperity and human development is directly linked to a reliance on electricity; UN Secretary-General Ban Ki-moon has publicly stated that renewables have the power to “lift the poorest nations to new levels of prosperity.”7 New York Times, May 10, 2013. Bloomberg, March 13, 2013. 3 Grist, February 19, 2013. 4 NA Windpower, July 19, 2013. 5 White House announcement, June 25, 2013. 1 6 2 7 The Atlantic, April 24, 2013. Renewable Energy World, August 25, 2011. Renewable Choice :: www.renewablechoice.com | 2
  • A Renewable Choice Energy Special Report: How Renewables are Winning THE DEMISE OF FOSSIL FUELS AND THE RISE OF CLEAN ENERGY The economic drivers behind the decline in fossil fuel generation include stagnant energy demand, highly competitive natural gas prices, stricter environmental regulations, and state renewable portfolio standards (RPS). U.S. renewable energy capacity doubled between 2009 and 2012 to a cumulative total of 85.7 GW.11 In the first six months of 2013, renewables provided more new electricity generating capacity than coal, oil, and nuclear power combined.13 Over the past 15 years, energy generation from cleaner power sources has been steadily increasing at the same time that fossil fuel consumption has been in decline. Natural gas—a cleaner and more affordable fossil fuel—has seen exponential growth, nearly doubling during that period. Wind and solar power have experienced similar dramatic growth curves. For example, in 1998, total wind power capacity in the U.S. was less than one gigawatt (GW) whereas in 2012, annual U.S. wind capacity was closer to 65 GW. Contrast these numbers to coal produced electricity: during a similar period, 20032012, coal has dropped from greater than half of all energy production to only 38% of the U.S. power supply.8 In 2012, more than 9,000 megawatts (MW) of coal-fired generation was retired and U.S. companies have retired or have plans to retire an additional 36,000 MW over the next several years, for a combined total of as much as 60,000-100,000 MW. The economic drivers behind the decline in fossil fuel generation include stagnant energy demand, highly competitive natural gas prices, stricter environmental regulations, and state renewable portfolio standards (RPS). And while the World Resource Institute reports that there are nearly 1,200 new coal plants in planning stages around the world, it is unlikely that these plants will be built as a result of climate-change driven regulations and plummeting natural gas prices.9 Even stalwart oil and gas companies have seen the writing on the wall. In late 2012, NRG Energy cancelled a planned 800 MW new coal plant in Texas due to natural gas prices, and earlier this year, Duke Energy announced that it will retire 6.3 GW of coal capacity in the next few years in favor of owning 6 GW of wind, solar, and biomass energy by 2020.10 THE RECORD GROWTH OF RENEWABLES The growth of renewables is extraordinary: U.S. renewable energy capacity doubled between 2009 and 2012 to a cumulative total of 85.7 GW11, and non-hydropower renewable energy generation in the U.S. is expected to more than double again between 2010 and 2035, in part due to the President’s Climate Plan mandate. Wind power will have the largest share of new capacity, expected to increase to 70 GW by 2035.12 In the first six months of 2013, renewables provided more new electricity generating capacity than coal, oil, and nuclear power combined.13 Renewable sources now make up nearly 16% of total operating capacity, more than oil (3.5%) and nuclear (9%). Reuters, January 4, 2013. Washington Post, November 20, 2012. 10 NA Windpower, April 22, 2013. 11 Bloomberg New Energy Finance, January 31, 2013. 8 9 U.S. Energy Information Administration Annual Energy Outlook, 2012. 13 NA Windpower, July 19, 2013. 12 Renewable Choice :: www.renewablechoice.com | 3
  • A Renewable Choice Energy Special Report: How Renewables are Winning Falling price has been a major driver behind this astonishing growth. Generating power from new wind farms has become more economical than bringing new coal or gas plants online in Australia, the world’s largest coal exporter14 and the cost of wind in the U.S. has dropped 90% since 198015 to around 5-10 cents per kWh. The staggering reduction in wind power cost is attributed to the PTC along with increased efficiencies in turbine design, manufacturing, and installation. Solar power has experienced a similarly dramatic decline in price, falling to as little as 74 cents per watt in 2013 compared to more than $76.67 per watt in 1970.16 U.S. businesses could save $780 billion dollars over 10 years by reducing GHG emissions by only 3%.19 In 2011 nearly 1M Americans were employed directly or indirectly by a clean technology sector, including wind, solar, biomass, and ethanol production.20 An influx of investment capital into renewables is also behind the growth. In 2011, global clean energy investment totaled US$260B. The majority of these investments has been asset financing of utility-scale wind and solar projects, and is more than six times the total investments made in 2004.17 THE IMPACT OF RENEWABLES ON CLIMATE CHANGE AND THE ECONOMY The increase of renewable energy generation and the retirement of coal plants have helped the U.S. achieve significant reductions in climate damaging GHG emissions. Overall U.S. carbon emissions have fallen by 13% from a 2007 high of 6.02 gigatons. This change can be directly attributed to higher consumption of cleaner burning natural gas, the rise of renewables, and increased efficiency buildings and vehicles—which, incidentally, are also saving Americans millions of dollars annually.18 The reduction in emissions isn’t just good for the climate and air quality. A new report by the World Wildlife Fund and Carbon Disclosure Project (CDP) estimates that U.S. businesses could save $780 billion dollars over 10 years by reducing GHG emissions by only 3%.19 This reduction would help U.S. corporations achieve a 25% reduction against 1990 emission levels by 2020. The increase in demand for renewables has also meant corresponding growth in the clean energy job sector. The Environmental and Energy Study Institute estimates that in 2011 nearly 1M Americans were employed directly or indirectly by a clean technology sector, including wind, solar, biomass, and ethanol production20 and more than 550 U.S. factories produce components for renewable energy technology. The solar industry alone has seen a more than 100% increase in jobs since 2009. SPECIFIC GROWTH: WIND POWER The U.S. Department of Energy hailed 2012 as a “banner” year for the U.S. wind industry. There was 13,131 MW of new installation in 2012, bringing the total US wind capacity to 60,007 MW and more than 45,100 turbines. Also during 2012, for the first time, wind power became the #1 source of new U.S. energy generating capacity, providing 42% of all new electricity.21 Bloomberg New Energy Finance, February 6, 2013 TriplePundit.com, September 26, 2012. 16 The Economist, December 28, 2012. 17 Bloomberg New Energy Finance. NRDC, June 27, 2013. The 3% Solution, WWF and CDP, 2013. 20 EESI. 21 AWEA. 14 18 15 19 Renewable Choice :: www.renewablechoice.com | 4
  • A Renewable Choice Energy Special Report: How Renewables are Winning Source: US Department of Energy, 2012 Wind Technogies Market Report Worldwide market penetration of wind power is expected to reach 8% of total annual electricity generation by 2018. Globally, wind power is growing at an annual rate of 30%; there are now more than 200,000 wind turbines worldwide, producing 282 GW of capacity annually with a total annual production of 460 terawatt hours.22 83 countries around the world use wind power commercially; of these, China and the U.S. make up nearly 50% of the global cumulative total. Worldwide market penetration of wind power is expected to reach 8% of total annual electricity generation by 2018. Denmark alone already generates more than a quarter of its electricity from wind annually, followed closely by Portugal (19%) and Spain (16%).23 Source: Global Wind Energy Council, Global Wind Statistics, 2012 22 Global Wind Energy Council, Global Wind Statistics, 2012 23 Wikipedia, Wind Power. Renewable Choice :: www.renewablechoice.com | 5
  • A Renewable Choice Energy Special Report: How Renewables are Winning The U.S. is the second largest wind power market in the world behind China with a cumulative global capacity share of nearly 20%. Despite being affected negatively in 2010 by the recession, the wind power industry rebounded in 2011 and 2012, with additions increasing more than 30% annually.24 Wind power now makes up 3.67% of U.S. generated electricity.25 The Department of Energy predicts that the U.S. could obtain 20% of its power from wind by 2030. The Department of Energy predicts that the U.S. could obtain 20% of its power from wind by 2030, given enough installed capacity and transmission upgrades. The National Renewable Energy Laboratory reports that, overall, the contiguous United States has the potential to generate 37 petawatt hours of wind power annually, nine times more energy than current U.S. consumption. SPECIFIC GROWTH: SOLAR POWER The amazing growth in wind power over the past 15 years is rivaled only by the exponential progress in the solar industry. Since 2008, solar energy capacity has grown more than 600 times, and in March, 2013, solar power accounted for 100% of new energy added to the U.S. electric grid26. By the end of Q1 2013, solar had added 723 MW of new power, 33% more than Q1 2012, and more than double what was added in the whole of 2012 (264 MW), for a total of 8,500 MW of total installed capacity27. Industry growth is expected to continue through 2013, with more than 5,000 MW of new capacity planned for the year. Solar installations are booming in both the residential and utility markets. Residential installations grew 53% in the first quarter over Q1 2012. Utility installations have more than doubled yearover-year; 318 MW of utility solar was mounted in Q1 2013, a full 49% of new electric capacity. U.S. PV Installations and Global Market Share, 2000-2012 Source: Solar Energy Industries Association Worldwind Technology, February 22, 2013. Wikipedia, Wind power in the United States. 26 Treehugger.com, April 19, 2013. 24 25 27 Solar Energy Industries Association, Solar Industry Data. Renewable Choice :: www.renewablechoice.com | 6
  • A Renewable Choice Energy Special Report: How Renewables are Winning Like wind, solar benefits from rising awareness of the impacts of climate change, relative higher prices for coal, advances in technology, and sharply falling prices. Since 2011, the average price of a photovoltaic (PV) panel has dropped more than 60%, for an overall system price of around $3.37/W.28 Falling prices are attributed to a corresponding fall in the price of silicon, the primary ingredient in PV panels. The ability to obtain cheap silicon has resulted in the ability to manufacture cheaper panels; this low price has fueled the rise in PV installation.29 The growth of the solar industry has resulted in economic benefits in addition to environmental ones. There are nearly 120,000 people now employed by the solar industry, a number expected to grow as demand continues to rise. In 2012, solar installations were valued at US$11.5B, an increase of approximately US$3B annually for the past three years. The growth in U.S. renewables is the combined result of a number of factors besides falling prices and private investment, including voluntary purchasers, state RPS, federal and state tax incentives and financial assistance. DRIVERS OF GROWTH The growth in U.S. renewables is the combined result of a number of factors besides falling prices and private investment, including voluntary purchasers, state RPS, federal and state tax incentives and financial assistance. Voluntary Purchasers More than 1,400 U.S. organizations are recognized as Green Power Partners30 by the Environmental Protection Agency and the voluntary use of green power in the form of renewable energy credits (RECs), solar RECs (SRECs), and Power Purchase Agreements (PPAs) has become a source of renewable energy for leading companies across the globe. These voluntary purchasers have elected to take action without waiting for legislation to guide their decisions. Voluntary markets help develop renewable energy capacity beyond mandatory market contributions as the result of state or federal directive by providing wind farms, PV installations, and other renewable projects with an additional revenue stream. This injection of additional revenue contributes to the financial stability of projects and incentivizes new development, allowing renewables to compete economically with fossil fuels. RECs in particular are the best way that individuals and businesses can support renewable energy development. State RPS Compliance markets, including state RPS, have played a significant role in driving the development of U.S. renewables. Currently, 29 states, the District of Columbia, and two U.S. territories have RPS in place.31 In these states, utilities are required to include a certain portion of electricity from renewable sources in their overall energy portfolio. Many RPS states have set aggressive goals for utilities, some as early as 2015. For many utilities, the best way to reach their RPS goals is through the purchase of RECs and SRECs. Solar Energy Industries Association, Solar Energy Facts, Q1 2013. 29 Gigaom, December 25, 2012. 28 30 31 EPA, Green Power Partnership. DSIRE. Renewable Choice :: www.renewablechoice.com | 7
  • A Renewable Choice Energy Special Report: How Renewables are Winning Incentives The expansion of U.S. wind power has been helped enormously by the wind energy PTC. The PTC provides a 2.2 cent tax credit for each kWh of electricity produced from large scale wind farms. The credit, which was extended for 2013 as part of the December fiscal cliff deal, is integral to enabling wind power to compete with highly subsidized fossil fuel-based electricity. The latest version of the PTC covers wind farms which begin construction in 2013. This will allow wind projects to qualify for the credit earlier in the development process than in prior years, leading to increased project investment and continued renewable energy development through the year. The American Wind Energy Association (AWEA) estimates that the tax credit’s extension will save as many as 37,000 U.S. jobs in the wind energy sector alone in 2013.32 Considerable incentives have also helped drive solar growth. States and the Federal government have offered tax incentives to individuals and utilities to bring more solar online, in some cases dropping the price of a solar system by more than 40%.33 CONCLUSION The massive growth experienced by the renewable energy sector, and the wind power and solar power industries in particular, point to a critical shift in the way the world is obtaining its energy. As our energy needs are unlikely to decrease as the world’s population increases, finding and developing renewable, clean sources of energy is a crucial task. There are numerous benefits to supporting the expansion of renewables, including reduced GHG emissions, improved air quality, human economic development, natural resource preservation, domestic energy generation, and job creation. There are numerous benefits to supporting the expansion of renewables, including reduced GHG emissions, improved air quality, human economic development, natural resource preservation, domestic energy generation, and job creation. The renewable energy industry still faces considerable challenges. The price of coal and natural gas remain low, making them attractive alternatives to wind and solar power. Both wind and solar are intermittent sources of energy, dependent upon consistent weather patterns to deliver power reliably. New growth in these industries faces the challenge of adequate transmission infrastructure and the availability of natural resources to produce wind turbines and PV panels. The continued popularity—and affordability—of both wind and solar rely on voluntary purchasers, state and Federal mandates, tax credits, and incentives. Despite these challenges, both wind and solar appear to have reached a tipping point. When even the largest energy companies in the world begin buying and installing renewable technologies in favor of coal, oil, or other fossil fuels, there’s an acknowledgement that something has changed. The paradigm has clearly shifted in favor of a clean energy future, instead of our dirty-burning, fossil fuel-driven past. 32 33 AWEA Press Release, May 2, 2012. Solar City. Renewable Choice :: www.renewablechoice.com | 8