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3 Reasons Renewable Energy Grew Rapidly in 2019

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In September 2019, the United States surpassed the 100 gigawatt milestone for installed onshore wind capacity. Perhaps even more impressive, more than half of those turbines were installed after 2012. That’s a massive development on the horizon of the U.S. energy landscape.

So, what are the key factors behind the rapid growth in renewable energy? 

We recently talked with Direct Energy Business President John Schultz about the industry's most noteworthy energy trends, and he had a lot to say about renewables: 

 

From Schultz’s vantage point, the growth in renewable energy is due to a trifecta of forces: regulations, improvements in technology and sheer economics.

Supporting Policies and Regulations

Across the country, many states have adopted policies that diversify their electricity supply, drive economic development and reduce carbon emissions. 

One of the most common policies designed to promote renewable energy, Renewable Portfolio Standards, or RPS, dictate that a specified percentage of electricity sold by utilities must come from renewable energy resources. Iowa was the first U.S. state to pass an RPS, and 29 states, three territories and Washington D.C. have all adopted some type of RPS since then. 

New York and Washington D.C. have made significant commitments to procure 100 percent carbon-free and renewable electricity respectively in the coming decades. In May, Maryland passed the Clean Energy Jobs Act, increasing the state’s RPS to 50 percent and leading to anticipated price hikes over the next decade. California has the most aggressive RPS goal in the country, with the state’s entire electricity supply required to come from carbon-free resources by 2045.

 

Renewable Energy Technology

Another important factor behind the growth in renewable energy projects is improvement in technology. 

Take wind power, for example. While some of the country’s oldest operating wind turbines were installed in 1975, the technology as a whole has dramatically evolved since then.  

“If you look at wind projects in the U.S., they’re getting taller, the blades are getting larger, and the output is going up,” Schultz notes. 

Over time, the average capacity factor, a measure for how often a generating unit operates, for U.S. wind projects has grown from 25 percent in 2001 to 43 percent in 2016. Now one of the latest and longest models of wind turbines has a capacity factor of 63 percent, which is comparable to the capacity factors of many natural gas and coal generating units.  

It’s All About The Economics 

As states increasingly adopt RPS policies and renewable energy technology advances, the overall economics have also improved. 

“In almost two-thirds of U.S. states, the cost of onshore wind and utility-scale solar compete directly with a natural gas combined cycle plant,” explains Schultz. “Those things are now at price parity.” 

Solar and wind project costs have fallen dramatically in the past decade. By some estimates, the costs for utility-scale solar (generally one megawatt or higher) have dropped 78 percent since 2010. During the same time period, utility-scale wind costs have dropped about 71 percent. 

As Schultz notes, wind and solar are now competitive with all of the major forms of power generation – including natural gas and coal-fired generation – on an unsubsidized, levelized cost of energy basis. 


Stay tuned to the Direct Energy Business Blog as we unpack more industry trends to watch for in 2020. Can't wait for more? Catch Schultz's analysis of the decarbonizing power market.

Posted: January 24, 2020

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