Energize Weekly, June 17, 2020
Renewable power’s continuing decline in prices is spurring near-term expansion, even in the face of the novel coronavirus pandemic and, according to a new report, could power 90 percent of the U.S. electric grid by 2035 while reducing wholesale electricity prices.
The analysis by the University of California, Berkeley and GridLab, a non-profit promoting clean energy development, uses the most recent cost figures for wind and solar and concluded that wind, solar, hydropower, nuclear and storage could provide 90 percent of the nation’s electricity by 2035.
All coal-fired units could be closed, and existing natural gas-fired plants could provide 10 percent of capacity. No new fossil fuel-fired plants would be built.
The transition would also lead to about a 10 percent decline in wholesale electricity rates in 2035 to about 4.6 cents a kilowatt-hour (kWh) compared to current rates – the result of low wind, solar and battery prices and a reduction in the use of fossil fuels.
The target date – provided there is a tripling of annual deployments – could be 2035 instead of the 2050 goal that has been set for a zero-carbon grid by some utilities.
“Plummeting costs for wind and solar energy have dramatically changed the prospects for rapid, cost-effective expansion of renewable energy,” the study said. “At the same time, battery energy storage has become a viable option for cost effectively integrating high levels of wind and solar generation into electricity grids.”
The study analyzed seven weather years to determine the variation in wind and solar generation compared to electricity demand and concluded that during normal periods of demand, wind, solar and batteries can provide 70 percent of annual generation with hydro and nuclear covering 20 percent.
When wind and solar generation are low and there is high demand, a combination of natural gas, hydro and nuclear generation along with storage can meet the grid’s needs. Natural gas generation, overall, is reduced 70 percent from 2019 levels.
The key to the analysis is a forecast for a continuing decline in the cost of wind, solar and storage.
Between 2010 and 2019 the global cost of onshore wind dropped 39 percent to 5.2 cents a kWh, according to the International Renewable Energy Agency, with another 18 percent decline projected to 2021.
The cost of photovoltaic (PV) solar dropped to 20 cents a watt in 2019 from $2 a watt in 2010, and the study said that storage capital costs dropped from $1,200 a kWh in 2010 to less than $300 in 2020.
The UC-GridLab study said estimates for future costs have consistently been revised downward. The National Renewable Energy Laboratory (NREL) Annual Technology Baseline each year has dropped its future costs estimates each year.
For example, NREL’s estimated levelized cost of energy for onshore wind in 2050 has dropped from $30 a megawatt-hour (MWh) in 2015 to $10 a MWh in its 2019 report. Utility-scale solar declined from $50 a MWh or just under $10 a MWh during the same period.
Levelized cost of energy takes the costs of building and operating a generating facility over its lifetime and divides that by the total electricity it generates to get cost per MWh. All the calculations in the UC-GridLab study are based on utility-scale solar and wind.
“Our findings contrast sharply with the findings of studies completed more than five years ago, which show future electricity bills rising compared to today’s bills,” the UC-GridLab analysis said. “Renewable energy and battery costs have declined much faster than these older studies assumed, which is the main reason their cost results differ so much from ours.”
To reach the 2035 target, however, would require building 1,100 gigawatts (GW) of new wind and solar capacity in the next 15 years – an average of 73 GW a year or more than triple the amount of wind and solar that has been deployed in any single year to date.
“Although challenging, a renewable energy buildout of this magnitude is feasible with the right supporting policies in place,” the study said. “For example, 65 GW of U.S. natural gas generation were built in 2002.”
The U.S. Energy Information Administration (EIA) said renewable energy will be the fastest growing source of electricity generation in 2020 with the power sector adding 23.2 GW of solar and 12.6 GW of wind. Although, EIA said that these additions are “subject to a high degree of uncertainty.”
The agency expects electricity generation from renewable sources to increase to 21 percent of the total in 2020 and 23 percent in 2021 from 17 percent in 2019. Coal’s share falls to 20 percent in 2021 from 24 percent in 2019.
In the first quarter of 2020, a record 3.6 GW of solar PV was added, the biggest quarter on record, according to a market report by industry consultant Wood Mackenzie and the Solar Energy Industries Association, a trade group.
The COVID-19 pandemic is projected to reduce installations by 9 percent from initial forecasts for the year, but that will still make a 30 percent year-over-year increase in installed capacity, about 18 GW, the report said.
Wind projects installed in the first quarter of 2020 totaled a record 1.8 GW, double the amount in the same period in 2019, according to the American Wind Energy Association (AWEA), an industry trade group. There is also a record 25 GW of projects under construction.
Globally in 2019, a record 826 GW of new non-hydro renewable generation was installed, a 12 percent increase over 2018, including 118 GW of solar and 61 GW of wind, according to a study by the United Nations Environment Programme (UNEP) in conjunction with the Frankfurt School of Finance & Management and Bloomberg New Energy Finance.
The UNEP study found that governments and companies around the world have committed to adding about 826 GW of new non-hydro renewable power capacity in the decade to 2030, at a likely cost of around $1 trillion.
“We see the energy transition is in full swing, with the highest capacity of renewables financed ever,” Nils Stieglitz, president of Frankfurt School of Finance & Management, said in a statement. “Meanwhile, the fossil fuel sector has been hit hard by the COVID-19 crisis – with demand for coal- and gas-fired electricity down in many countries, and oil prices slumping.”
