Graph of the Day: Solar’s anticipated surge in US

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EIA analysis suggests solar will be fastest growing energy technology in US, although mix in 2040 depends on carbon, policies and costs.

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The US Energy Information Administration has released some interesting forecasts for renewable energy technologies out to 2040, under a bunch of scenarios that range from a $25 carbon price, to extended tax credits, falling renewable technology costs and varying costs of fossil fuels.

The “reference” case scenario painted by the EIA, generally regarded as highly conservative on technology costs and with a bias towards fossil fuels, presents a disappointing future for renewables, which would only account for 16 per cent of US generation by 2040. That is based on a continuation of policies, but most of its other scenarios are much more positive.

The includes the carbon price (GHG25), a resumption of expired tax credits (No Sunset), lower renewable technology costs, higher oil and gas costs and resource growth, high and low economic growth, and low oil and gas costs.

Interestingly, though, while the growth of renewables is capped under most scenarios, the EIA says as renewable generation sources become increasingly competitive after 2025, a favorable shift in assumptions may result in an impact that does not have a limit on the upper bound.

In the case of solar, that technology is expected to be the fastest growing in any scenario, although its growth is quite spectacular in the various favourable scenarios (see graph below)

 

eia solar

The EIA admits that PV costs are difficult to forecast. “Technologies, there is enough variation among current projects in terms of geographic locations, technologies, developer experience, and regulatory frameworks that even the most carefully developed estimates will overstate actual costs for some projects and understate costs for others. While PV capital costs have declined over the past decade, there is continuing uncertainty about both the degree and pace of future cost declines.”

eia wind

Wind is the other major renewable technology that will grow quickly, even from a higher base, although its most positive forecasts rely on their being a carbon price and a continuation of the tax credit that has currently been suspended in the US.

The graph below shows the EIA reference case, which paints a relatively bleak picture of the energy mix if nothing else changes.

EI base case

But in the graph below, the results vary significantly, particularly in the later years of the projection. For example, in the GHG25 case total non-hydropower renewable generation in 2040 is 83 per cent higher than in the Reference case, and in the High Oil and Gas Resource case total non- hydropower renewable generation in 2040 is 12 per cent lower than in the Reference case.

In its assessment of renewables, however, the EIA, admits that it is not yet factoring in storage costs, because it considers that technology to be immature. And its low technology cost assumptions only anticipate a 20 per cent fall below its reference forecasts. If, for instance, those technology costs fall 50 per cent below its reference forecasts, as much of the industry possibly anticipates, then the growth in renewables would be much higher.

EIA forecasts“Solar and wind energy are expected to remain the primary sources of renewable capacity growth,” the document says. “Although geothermal, waste, and biomass resources have some favorable characteristics compared to wind and solar, such as the ability to provide operator dispatched power, each has significant limitations.

“The limitations include a limited resource base (geothermal, waste) or relatively high capital and/or fuel costs (biomass). Although wind and solar will continue to be capital-intensive technologies, they are expected to achieve cost reductions that—along with a larger resource base—result in higher growth than other renewables under favorable conditions (such as placement of an explicit or implicit value on CO2 emissions, or high natural gas prices). However, solar and wind resources also vary in availability and quality by region, and generation facilities are likely to be concentrated in the more favorable regions.”

More graphs can be found here.

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6 Comments
  1. Doug Cutler 5 years ago

    “as renewable generation sources become increasingly competitive after
    2025, a favorable shift in assumptions may result in an impact that does
    not have a limit on the upper bound.”

    – sheer poetry.

  2. Bob_Wallace 5 years ago

    Thermal plants in the US are old and most will need to be replaced in the next 10 to 25 years.

    New wind and new solar are significantly cheaper than new coal or new nuclear. They are about equal to new CCNG with gas prices expected to rise as wind and solar prices continue to fall.

    It’s a bit hard to see how large thermal plants will hold market share when economic forces will move utilities toward more renewables. Why spend well over 10c for thermal plants when wind/solar/storage can provide 24/365 power for less than 10c?

    • RobS 5 years ago

      Wind and solar may be able to provide power for under 10c/kwh but current storage costs adds at least a further 20c to that, of course that will fall but we are not a the point yet where renewables can be stored and still come out cheaper than fossil fuels, importantly we don’t need to be at that point though because renewables can grow a further ~300% before we need storage to avoid intermittency problems.

      • David Osmond 5 years ago

        That may be true on the large scale when you are competing with the wholesale price of fossil fuels, but it is borderline when you are talking about residential scale. Then you are competing against retail electricity prices of ~30c/kWh. If you are only putting half of your solar through the batteries, then on average you only need to add ~10c for the storage (assuming 20c for storage, which may be a bit optimistic for now), and then things get interesting…

      • Bob_Wallace 5 years ago

        20c is the cost of lead-acid deep cycle batteries for home storage. Pump-up hydro is about a fourth as much.

        Here in the US we are going to have to replace aging thermal plants. The choice is not new wind/solar vs. old coal/nuclear but new coal/nuclear.

        We’re currently building a couple of reactors that are going to cost at least 11c/kWh. More if there are additional cost and timeline overruns. And we can’t build for that price again because interest rates are unlikely to remain absurdly low as they now are.

        Wind in the US is now selling for 2.1c/kWh. Solar in the SW has hit 5c/kWh. Add 1.1c to each to remove subsidies. Figure 40% of our electricity direct from wind, 30% direct from solar and 30% stored W/S at 10c/kWh (14.5c incl. W/S input)..

        That mix prices out under 8c/kWh. Nuclear can’t touch that.

  3. RobS 5 years ago

    God the EIA is hilarious, its like they are writing parody reports but in actual fact they are deadly serious.
    Just look at the first chart IF7-4, in the yellow Low solar cost scenario and the blue tax credits are continued scenario we see they predict a ~50% and ~120% growth between 2020 and 2030 in solar power output. Solar power output has grown more than 100% PER YEAR for the last 4 years….Its like they don’t want to be taken seriously.

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