How Renewables are Winning - Report

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


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



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



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.



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.



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.



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.


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