5 Powerful Trends Driving the Rise of Renewable Energy

Renewable energy growth continues to skyrocket.

In 2018, renewable generation in the United States set a new record of 742 million megawatt-hours (MWh) of electricity – nearly double the output produced by renewables a decade earlier.

And the growth in renewable generation isn’t expected to subside anytime soon: the U.S. Energy Information Administration (EIA) now projects that renewable energy will be the fastest growing source of electricity generation for at least the next two years.

So, what is behind the rapid and sustained push for more renewables? Watch as Dave Grupp, Head of Renewable Services at Direct Energy Business, presents his findings on the rise of renewables at The Energy Professionals Association meeting in Pittsburgh.

Here are the five powerful trends that Grupp says are driving the rise of renewable energy – and a dramatic shift in the nation’s power generation.

1. Growing Concern over Climate Change

The last five years – 2014 to 2018 – were the warmest years ever recorded by the National Oceanic and Atmospheric Administration (NOAA) in its 139 years of recordkeeping. Extreme weather events have become more and more common, making headlines across the globe.

It was just four years ago that 195 nations reached the groundbreaking Paris climate change accord in an attempt to halt the global temperature rise at 2 degrees Celsius (above pre-industrial levels). However, just last year, a special report produced by the United Nations Intergovernmental Panel on Climate Change (IPCC) found that the Paris Agreement would be insufficient in limiting the impacts of climate change. Instead, the report found there is only about a decade left to keep global warming at 1.5 degrees Celsius.

The report has sparked concern among business leaders and policymakers around the world. For their part, customers and businesses are increasingly exploring ways to combat climate change, beginning with the way they use energy.

2. Strong Supporting Public Policies and Regulations

Across the country, states have moved to put policies in place that diversify their electricity generation mix, drive economic development and expand renewable energy.

One of the most common types of policies designed to promote renewable energy are called Renewable Portfolio Standards (RPS). These standards mandate that a certain percentage of electricity sold by utilities must come from renewable energy resources. Iowa was the first U.S. state to pass an RPS and since then 29 states, three territories and the District of Columbia have all adopted some type of RPS. An additional eight states and Guam have also set voluntary renewable energy targets.

Recently, New York and the District of Columbia both made ambitious commitments to procure 100 percent carbon-free and renewable electricity respectively in the coming decades. In May 2019, Maryland passed the Clean Energy Jobs Act, increasing RPS to 50 percent and leading to significant expected price hikes over the next decade. California currently has the most aggressive RPS goal in the U.S., as all of the state’s electricity supply must come from carbon-free resources by 2045.

Since 2000, nearly half of all growth in renewable energy generation can be directly attributable to state renewable energy policies.

3. Increasing Corporate Commitments

Businesses are helping lead the charge with renewable energy growth and publicly committing to more aggressive renewable energy and sustainability targets.

To date, 260 of Fortune 500 companies have publicly committed to some type of emissions or renewable energy target. Furthermore, more than 150 of the world’s most influential companies have now pledged to 100 percent renewable energy as part of the international RE100 initiative.

But, businesses can’t be expected to do it alone. In 2019, businesses expect energy providers to directly help them meet their sustainability and renewable energy targets. Energy providers are uniquely positioned to help large businesses boost their sustainability with a number of different renewable options, ranging from renewable energy credits (RECs) to green power purchase agreements and other customized solutions.

4. Significantly Declining Costs

All of the major renewable energy policy and business developments have taken place as the costs for renewable energy – in particular, solar and wind generation – have fallen dramatically.

In fact, by some estimates, the costs for utility-scale solar (generally one megawatt or higher) have dropped 78 percent since 2010. Utility-scale wind costs have dropped about 71 percent over the past decade.

Costs have fallen to the point that – on an unsubsidized, levelized cost of energy (LCOE) basis – wind and solar are now competitive with all of the major forms of power generation, including natural gas and coal-fired generation.

5. Integrated Energy Supply Economics

When renewable energy resources are strategically integrated into an energy supply, they help improve energy supply economics for businesses. Renewable energy sources are generally predictable in timing of output, can align with peak demand, involve lower transmission and distribution (T&D) charges and can help serve as a long-term fixed price hedge.

In particular, solar generation is relatively predictable as its generation output correlates with when customers use the most energy (late afternoon/early evening). Solar output is also highly correlated with load swings. For example, on an extremely hot summer day when air conditioner usage spikes, solar generation output also usually increases.

So, with the numerous benefits posed by renewable energy, how can your business begin integrating it into your energy procurement strategy?

“It really depends on your organization’s goals,” said Grupp. “Whether you’re looking to seamlessly integrate renewable energy supply into your existing commodity agreement or take on a larger scale project like an on-site solar installation, we can help you meet those sustainability goals."