Five Reasons to be Thankful for the Renewable Energy Sector this Year
Thanksgiving is a great tradition in the US, from a full day of football, turkey and films like Planes, Trains and Automobiles, one of the best parts of the tradition is the spirit of reflection it encourages. It is perhaps a timely opportunity for the renewable energy sector in the USA. Given the urgency around issues of climate change and concerns around current policy, it can be easy at times to not be thankful enough for some of the significant progress and achievement that the renewable energy sector is achieving in the USA. So, here are five things from 2019 that I think supporters of renewable energy in the USA should be thankful for.
The US is also a good example of a developing international trend, namely that where central government often struggles to manage a national renewable energy policy, local politicians and government are more than willing to take up the challenge. UCLA’s Luskin Center for Innovation recently held a summit on State & Local Progress Toward 100% Clean Energy. It estimates that a third of all Americans live somewhere that will have 100% clean energy – at time of writing at least 12 states/districts and more than 100 cities have committed to 100% clean energy and the number is likely to grow. A recent study found that there is enough solar, wind and hydro potential for 30x the energy need under a business as usual scenario for the US by 2050, so it very much feels like at a local level, 100% clean energy is an idea whose time has come.
Renewable Energy is Expanding Beyond its Heartlands
Very much a continuation of the previous theme, a sign of the success of renewable energy is that it is now seeing nationwide adoption. The success of the industry can be measured in the fact that it has grown beyond places such as Washington DC and San Francisco to include Kansas City, Atlanta, Cleveland and Salt Lake City. One of the most gratifying sights of recent years has been the wholesale adoption of renewable energy by Texas, a long-term proponent of oil and gas. The South in general has been more positive than most people give it credit for, Louisiana has benefitted from the use of renewable energy microgrids in rural areas, whilst Alabama has used revenues from solar installations to provide revenue to schools. The hope is that as the benefits of clean energy become more visible, the idea will become less partisan.
Wind Energy Achieved a Major Milestone
2019 is the year that wind energy hit the 100GW milestone, whilst Q3 of 2019 was the third highest quarter on record for new wind energy being commissioned. In fact, wind energy supplies nearly 32 million homes. What is especially exciting about the American wind energy market is that is mainly all onshore wind, leaving plenty of scope for additional capacity from offshore sources.
The nation’s first offshore wind farm at Block Island off or Rhode Island only went operational at the tail end of 2016. However, there has been significant energy in 2019 for more offshore wind energy. At present the East Coast states of Maine, New York, Connecticut and New Jersey have been leading the efforts for more offshore wind, but there has been encouraging stories coming from California where the possibilities for the deployment of floating wind are gaining genuine interest. With energy demand being so high in coastal regions, offshore wind may be the best answer until grid connectivity improvements can link the high renewable potential Midwest regions to coastal areas.
Power Purchase Agreements
PPAs are having a tremendously positive impact on US renewable energy – providing consumers with price certainty and developers with longevity. Both benefits are great for providing confidence in the renewable energy sector. Importantly clean energy PPAs are also entering into new territory, traditionally a preserve of tech firms, increasingly more mainstream areas such as beer, fast food, sport and automobile manufacturers. US firms are also signing the majority of global clean energy PPAs with 5.9GW alone in the first half of 2019.
I recently wrote a more detailed look at US PPAs which you can check out here if you are interested in reading more on the topic.
Economics tends to be one of the most powerful arguments for the success of most things (especially in confronting sceptics). A traditional barrier to renewable energy adoption is that it presented consumers with a choice (where they have had that choice), would they pay more for a product with environmental benefits compared to a cheaper but more damaging energy product? That is no longer the case, the price of renewable energy is getting cheaper and is now cheaper than coal (and that is even before you factor in the long-term costs of climate change). A good example comes from a recent study by Vibrant Clean Energy (VCE) focused on Colorado and found that the most expensive energy option for the state was to keep running it’s coal fired power plants.
However, it’s not just falling prices for consumers that will be decisive for US renewable energy. Of equal importance is the dropping costs of components and construction costs. 2020 may see the end of Production Tax Credit (PTC) for wind schemes and the Investment Tax Credit (ITC) for solar, however the loss of these credits should be compensated by material costs dropping in spite of tariffs. Elsewhere the weighted construction cost of wind schemes dropped 13% between 2013-2017 and solar schemes dropped a very impressive 37% in the same time period. The industry has reached a point where its efficiency will make it much more resilient and less vulnerable to loss of credits and subsidies.
I hope you’ve enjoyed this article and it would great to get your thoughts on what else we should be thankful for in US renewable energy!