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Published on August 30th, 2013 | by James Ayre

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Solar & Wind Power To Be Cost-Competitive Without Subsidies By 2025 (NREL), While Fossil Fuels Still Subsidized Through Externalities

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August 30th, 2013 by  

Solar and wind power could be cost-competitive — without federal subsidies — with conventional power sources if new renewable energy development is focused around highly productive locations, according to a new study from the National Renewable Energy Laboratory (NREL). As is often the case, this assumes fossil fuels (e.g., natural gas) retain their huge subsidies in the form of externalities, which common citizens (and disproportionately the poor) pay through illness, early death, healthcare bills, higher health insurance premiums, disasters relief, and so on.

The new report, titled Beyond Renewable Portfolio Standards: An Assessment of Regional Supply and Demand Conditions Affecting the Future of Renewable Energy in the West, makes the case for renewables by directly comparing the cost of unsubsidized renewable energy generation from the most productive renewable energy resource areas of the West with the cost of electricity from a new natural gas-fired generator built near the customers it serves. The figures for “costs” include transmission and integration costs.

“The electric generation portfolio of the future could be both cost effective and diverse,” stated NREL Senior Analyst David Hurlbut, also the lead author of the new report.

If renewables and natural gas cost about the same per kilowatt-hour delivered, then value to customers becomes a matter of finding the right mix.

Renewable energy development, to date, has mostly been in response to state mandates. What this study does is look at where the most cost-effective yet untapped resources are likely to be when the last of these mandates culminates in 2025, and what it might cost to connect them to the best-matched population centers.

Image Credit: Wind Energy via Flickr CC

Image Credit: Wind Energy via Flickr CC


The new report incorporates previous research that the lab performed for the Western Governors’ Association — work that identified the areas throughout the West where renewable energy development would be most effective, while having a minimal effect on wildlife habitat.

Some of the key findings from the new report:

  • Wyoming and New Mexico could be areas of robust competition among wind projects aiming to serve California and the Southwest. Both states are likely to have large amounts of untapped, developable, prime-quality wind potential after 2025. Wyoming’s surplus will probably have the advantage of somewhat higher productivity per dollar of capital invested in generation capacity; New Mexico’s will have the advantage of being somewhat closer to the California and Arizona markets.
  • Montana and Wyoming could emerge as attractive areas for wind developers competing to meet demand in the Pacific Northwest. The challenge for Montana wind power appears to be the cost of transmission through the rugged forests that dominate the western part of the state.
  • Wyoming wind power could also be a low-cost option for customers in Utah, which also has its own diverse portfolio of in-state resources.
  • Colorado is a major demand center in the Rockies and will likely have a surplus of prime-quality wind potential in 2025. However, the study suggests that Colorado is likely to be isolated from future renewable energy trading in the West due to transmission costs between the state and its Rocky Mountain neighbors.
  • California, Arizona, and Nevada are likely to have surpluses of prime-quality solar resources. None is likely to have a strong comparative advantage over the others within the three-state market, unless environmental or other siting challenges limit in-state development. Consequently, development of utility-scale solar will probably continue to meet local needs rather than expand exports.
  • New geothermal development could trend toward Idaho by 2025 since much of Nevada’s resources have already been developed. Geothermal power from Idaho could be competitive in California as well as in the Pacific Northwest, but the quantity is relatively small. Reaching California, Oregon, and Washington may depend on access to unused capacity on existing transmission lines, or on being part of a multi-resource portfolio carried across new lines.

Something to keep in mind — the report notes that future energy demands will be highly influenced by a variety of factors which are hard to predict far into the future, such as: changes in the price/supply of natural gas; consumer beliefs; technological changes; improvements in energy efficiency; and government policies/regulations. It’s important to note that the study’s supply forecasts are based solely upon empirical trends and recent evaluations of resource quality.

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About the Author

's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy. You can follow his work on Google+.



  • Stefan Gsänger

    This
    headline sounds attractive but is still quite misleading: Actually in
    many markets onshore wind is already today the cheapest option, wind is
    already “cost competitive”, even without taking into account external
    cost such as pollution or climate change.
    However, due to the special investment structure, in particular their
    low marginal cost (=low operational cost), wind&sun will always need
    market structures different than a simple spot market. It is not a
    matter of subsidies, it is a matter of fair market access and fair
    market rules.

  • JamesWimberley

    The report isn´t intended to create timelines for future renewables costs. Its focus is developments and regional flows beyond 2025, when it assumes they will all be widely competitive.
    The report is conservative on geothermal (page xi). It does not put a probability on rapid progress in EGS, which would unlock a vast and widely distributed resource in the Western half of the USA.

    • Bob_Wallace

      EGS would be world-wide.

  • Andrew West

    This must be the solar-cheerleaders “hail Mary pass”

    Can we stop wasting money in solar schemes? After $1 trillion in investment in solar it produces less than .2% of our electricity.

    It us NOT a solution.

    • Bob_Wallace

      Sure, Andrew.

      Now grab your lunch box and hard hat and get back down in that coal mine.

      • Andrew West

        Natural gas with oxy-fuel combustion can reduce CO2 emissions by 80% in the near term. Solar has achieved no measurable reduction in GHG emissions and we can’t afford to continue to subsidize technologies that do not make a difference.

        • Bob_Wallace

          Perhaps. But unless the leaking methane problem is solved then we wouldn’t be much better off. If any. Moving from 100% coal to 100% natural gas would be only a small help.

          I’m not sure how you can claim that solar has no impact on GHG emissions when we see Australia closing coal plants because they have only a modest amount of solar installed.

          Wind and solar clearly work. There is zero dispute.

          They are also not 24/365 energy sources. That is also clear.

          Wind is now about the same price as natural gas generation. PV solar will drop to the cost level of NG in the next few years.

          The best way we have to cut GHG emissions right now is to use wind, when it is available, and solar, when it is available. Both have very low lifetime carbon footprints.

          When wind and solar are not available we should first use the storage we have (20 GW of pump-up and 1 GW of CAES) and hydro. When those aren’t adequate then turn to NG.

          We have new storage technology in the works. As/if these technologies prove themselves they we can use them to reduce the amount of NG we use.

          This way we can transition off fossil fuels while keeping our lights on 24/365.

          • Andrew West

            The solar-darling Germany has the most coal plants under construction and this year alone electricity from coal is up 4%. Coal has suffered because of the price of natural gas – it has nothing to do with solar. (In Australia solar is only .2% of electricity production, coal is 80%).

            For the money we have wasted on solar we could have retrofitted our coal power plants to natural gas – oxyfuel and reduced CO2 by 80%.

            The $1 trillion we’ve wasted on solar schemes has done nothing measurable.

            It is delusional to believe solar will replace fossil fuels. Using fossil fuels more responsibly and efficiently can make a significant difference. I know loving solar lets you hate fossil fuels, but the point is progress – measurable progress.

          • Bob_Wallace

            Correct, Germany is building coal plants.

            Germany’s new coal burning plants are replacing (not adding to) the older plants that either have been or will soon be decommissioned. These new plants were planned and construction was started prior to the decision to close nuclear plants.

            By 2020, 18.5 gigawatts of coal power capacity will be decommissioned, whereas only 11.3 gigawatts will be newly installed.

            Furthermore those plants will be more efficient, releasing less CO2 per unit electricity produced than are the ones they are replacing. And the new coal plants are partially load-following.

            BTW, Germany is still on track to be CO2 free by 2050.

            Coal is up a bit in the US due to rises in NG prices. It won’t rise much because we have a very large number of coal plants shutting down over the next couple of years. But pay attention to the “rises in NG prices” part. As NG increases in price renewables and storage become more affordable.

            “The $1 trillion we’ve wasted on solar schemes has done nothing measurable.”

            I’d love to see your source for that number.

            We have spend a few billion on solar subsidies. And that investment has taken the price of solar panels from around $100/watt to just about $0.70/watt. That’s almost a 150x price drop.

            We’ve spent billions and billion more on fossil fuels and their price keeps rising. And will keep on rising. We’ve used up the ‘cheap to get to’ stuff. We’re having to go further, drill deeper and refine poorer quality stuff and that means that it’s going to get more expensive.

          • Bob_Wallace

            Let me add – Germany’s wholesale cost of electricity was down 5 billion euros last year due to solar on their grid. And they saved 8 billion euros on fossil fuel purchase.

          • Andrew West

            Germany is reducing it’s solar developments by 50% this year:

            http://www.reuters.com/article/2013/08/27/us-germany-renewables-minister-idUSBRE97Q0AY20130827

            The party’s over.

          • Bob_Wallace

            Germany just made a drastic cut in their FiT. Of course that’s going to slow installation rates. At least for a while.

            The “making a lot of money from FiTs” party is over.

            Solar is now being installed on its own merit. Don’t worry about solar. It’s about to take off like nothing you’ve ever seen in energy. (Well, there was the short-lived natural gas drilling ‘gold rush’.)

          • Bob_Wallace

            That Reuters article is kind of interesting. Wrong, but interesting.

            First, the author gives nuclear a 60 year lifespan. Historically that is not at all what we see. I’d have to look the actual number up again, but IIRC it’s less than half that. I have a great book on old barns. In it the author talks about someone saying that they built barns so much better in the past. He replies that it is not necessarily the case. It’s more likely that only the best built lasted long enough to still be around.

            The two SONGS reactors lasted less than 30 years.

            Kewaunee didn’t make it to 40.

            Vermont Yankee will make it to about 40.

            Crystal River made it to just over 40.

            Then he makes a big case on his faulty $kWh calculations. He doesn’t take time of delivery and dispatchability into account.

            He does take fuel costs into account, but he doesn’t grasp what a zero-fuel cost generator can do to clearing prices. How they can rip the guts out of always-on generation.

            And, of course, his numbers are more than a year out of date.

          • Andrew West

            Natural gas prices are no longer volatile. In fact, some power companies are negotiating 10 and 20 year supply contracts with a fixed price. This is because it is now very predictable to extract natural gas.

            It’s the cost, Bob:

            http://www.forbes.com/sites/jamesconca/2012/07/08/the-direct-costs-of-energy-hydronuclear-best-solar-still-lagging/

          • Bob_Wallace

            One can write a good contract for a long time as long as they do a good job of covering expected (and actual) price changes.

            And over a long period of time volatility can be evened out.

            It seems that those who trade in NG expect prices to rise over time, not stay the same.

            https://www.cmegroup.com/trading/energy/natural-gas/natural-gas.html

            And that’s not surprising considering how rapidly some of our wells are playing out. There is going to be a lot more drilling and refracking than was expected a couple years back.

            Now, I’m not going to try to predict that NG prices will be more or less volatile going forward over the next few years than they have been over the last few. Recently we’ve seen them drop by more than 2x and then rise by more than 2x. Are we now entering a prolonged era of flat NG prices? Who could possibly know.

            What I’m hearing is that current prices will not support future drilling needs. Perhaps those contracts are based on expected drilling costs.

            I do wonder how those long term contracts deal with possible carbon pricing….

          • JamesWimberley

            Bob: why are you wasting your valuable time on this troll?

          • Bob_Wallace

            It must be my upbringing in the church.

            I was taught to assume sinners can be saved and told it was our duty to make an attempt.

            While I’ve moved on past the invisible friend stuff, I guess I look at someone who shows up talking about fossil fuels or nuclear as someone who has probably been led down the path of wickedness, er, crappy energy solutions and might be brought to the light with a few facts.

            (But I do have a limited number of cheeks I’m willing to turn…..)

          • Andrew West

            Please read this rational article:

            http://www.slate.com/articles/health_and_science/project_syndicate/2013/08/green_energy_subsidies_for_solar_and_wind_power_aren_t_helping_let_s_invest.html

            I support R&D for solar, not deployment. We don’t have money or time to waste.

          • Bob_Wallace

            I opened your link, Andrew. And the second thing I saw was the author.
            There was no need to go further.

            I knew the message.

            “Wait” “Go Slow” “Maybe something great will get invented”

            Right?

            Well, imagine this. You’re in the ocean, way out there, and your boat starts to leak. If you don’t do something you will sink and drown.

            Here are your options:

            1) Bail. (Which may or may not be enough.)

            2) Don’t bail but spend your time trying to MacGyver as super-dooper cooliscious pump. (Which you may not be able to do.)

            3) Bail and think about ways to build a pump.

            I’m pretty much all in for the #3 choice. Let’s bail/install the best of what we have in hand (wind, solar, biomass, geothermal, and hydro) while we put money and effort into coming up with better options.

            Let’s say that we install wind and solar for 15 years, get all the coal off our grid and most of the natural gas. And then we invent, what, fusion? Great we can quit installing wind and solar and now install fusion. And our job will be easier because we’ve already gotten rid of most of the fossil stuff.

            And we’ll have 15 years less CO2 in our atmosphere kicking our butts.

            And if we don’t invent fusion in 15 years we will be almost done getting fossil fuels off our grids.

          • Matt

            Bob you have the patience with the trolls. ;)

        • Matt

          Why not we subsidize coal, oil, and gas for over 100 years and still have have direct support today.

          • Andrew West

            Coal and natural gas produce reliable, affordable electricity.

          • Bob_Wallace

            Right you are.

            Also -

            Rocks sink in water.

            Leaves fall off deciduous trees in the fall.

            Dogs mark their territory by peeing.

            Anyone else care to add any truisms?

            (Oops, sorry, you aren’t right. I looked at only the generated electricity cost of coal and natural gas. I left out their externalities which make them very, very expensive.)

    • JamesWimberley

      Where do you get the $1 trillion? Global investment in solar PV was (by one source) $126 billion in 2012. Given the growth rates – two-thirds of capacity went in during the last 2 1/2 years – , the cumulative total can´t be much more than $500 bn. Your 0.2% of electricity production must be a US figure; the share in Germany was 5% in 2012, from 28 Twh (Fraunhofer).

      I´d trust Warren Buffett´s business judgement against your fraudulent talking points any day.

      • Andrew West
        • Bob_Wallace

          I can’t find anything about $1 trillion spent on solar in your link, James.
          Can you point it out?

        • Ronald Brakels

          Andrew, you are so funny. As the price of solar drops people install it on their roofs because it saves them money like in that weird place called Hawaii. Here in Australia we are installing solar at an average of about $2.30 a watt. At Australian prices and US interest rates rooftop solar provides electricity at a lower cost than retail grid prices for most of the US population. The US is going to install a lot of solar capacity precisely because it’s cheap. It’s already started.

          • Bob_Wallace

            Andrew is busy looking for the $1 trillion he misplaced somewhere.

            Andrew, if you take a break from your search you might want to give this piece a read. Heck, I’ll copy over the first part for you…

            “Already a widely discredited former climate change denier and fossil fuel promoter, Bjoern Lomborg is at it again, using obsolete data and sleight of hand to confuse his readers in a recent piece in Slate entitled “Green energy needs to be cheaper.”

            While Mr. Lomborg manages to works in a few gems like “The switch to fossil fuels has also had tremendous environmental benefits.” and “Coal saved Europe’s forests,” the reality is that, thanks to massive cost reductions, wind energy is already making important contributions to solving our environmental problems. Wind power has accounted for more
            than 35 percent of all newly installed electric capacity in the U.S. over the last five years, and renewables combined were 55 percent of all new capacity in 2012.

            Wind now reliably provides more than 20 percent of the
            electricity in Iowa and South Dakota and more than 12 percent in nine states, according to the Department of Energy.

            The amount of wind power installed in the U.S. today reduces CO2 emissions by almost 100 million tons per year–equivalent to taking 17 million cars off the road.”

            “In his piece, Mr. Lomborg repeatedly attempts to lump modern renewables like wind and solar in with prehistoric energy sources like burning firewood for heat. That allows him to point to underdeveloped regions and make ridiculous arguments like “The most renewables-intensive places in the world are also the poorest.”

            (Incidentally, a few paragraphs later, Mr. Lomborg acknowledges that wind energy supplies 34 percent of Denmark’s electricity, though he doesn’t offer an explanation as to how Denmark and other wealthy European countries that obtain more than 15 percent of their electricity from wind energy fit into his theory about the relationship between wealth and renewable use.)”

            http://www.evwind.es/2013/08/31/lomborg-errs-on-cost-of-wind-power/35513

          • Edmond Dantes

            Actually I think Andrew knows exactly where the money is…

            https://sites.google.com/site/andywestpublicrecord/

          • Andrew West

            Solar is at least double conventional production. After spending more than $1 trillion in the last 10 years it is less that .2% of production. That is insignificant – in Hawaii and elsewhere. If the goal is reducing CO2 emissions dramatically, solar hasn’t done that and cannot.

            Hating fossil fuels doesn’t solve the problem. Using them more efficiently does.

          • Bob_Wallace

            Andrew, again, where do you find $1 trillion spent on solar?

            This is a community that likes questionable claims supported.

          • Edmond Dantes

            Hey Bob, you can trust this Andrew guy. Just don’t look behind the curtain….
            https://sites.google.com/site/andywestpublicrecord/

          • Bob_Wallace

            Might be him. Might be one of many Andrew Wests.

            There are lots and lots of Bob Wallaces.

          • Edmond Dantes

            yes. it could be someone else entirely. like the andrew west on this page:

            http://lauferenergy.mst.edu/panelmembers/

          • richard

            Electrical Engineer here
            first – nuclear is the best option without argument
            worse case scenario a couple hundred or 1000? people die
            best-cheaply replace worlds worth of coal plant with existing tech faster than any other technology could and save millions from sickness etc
            Average cost of installation of moderate to large 10kw+ systems
            is 5$/watt
            california is rolling back subsidies drastically as we speak
            even with “net metering, 30% federal tax break, 100% tax depreciation, and a .2$/watt additional subsidy in california you are looking at a ROI of 9-10 years right at stock market average.
            So even in the subsidy hay day its only a breakeven mildly good investment considering its relatively low risk
            question one
            utility companies arent evil corporations as all you hippy idiots believe, they like money, if they could take advantage of the subsidies to make more money they would – hint they can, and hint they dont because its not worth it not at all. Wind farms stopped being built- pickens lost his ass in that-because it didnt make $ sense
            question two – all of these solar subsidies could have been spent directly as loans to companies or to RESEARCH the thing that is actually making the panels cheaper
            breakthroughs in lowering the $/watt are coming predominantly through new tech not economy of size
            dollar per dollar you could take all of this WASTEFUL subsidized spending and put it towards useful research and a small amount towards killing coal and promoting NG
            and SIGNIFICANT-ECONOMICAL-INSTANT-reductions in co2 and particulates
            also, solar is not grid power-it will never be
            you need either huge hydroelectric storage 80% efficient
            or batteries (god knows %) to offset peak with trough
            TLDR were not doing the best job investing the money by paying people to install them on their roof in highly inefficient residential applications – the dam labor is the largest cost
            you’re also killing your poor utility company since they get stuck soaking up all the solar power during peak hours
            and then at night when your systems all shit out they have to crank up their generators INEFFICIENTLY to power your homes-still better than batteries resulting in higher prices for you at night and all the other smart poor people
            wind is even worse-significantly worse, and its already hit its technology peak-the generators arent going to improve largely since motors are 100+ yrs old about and the blades are already pushing possible efficiencies
            im all for solar, but QUIT PAYING STUPID HOMEOWNERS to buy shitty GEN1 panels and slap them on their homes in TINY 1kw (if that even) installations with CHEAP inverters etc and fixed angles causing even more innefficiency
            im an engineer and im telling you
            the best idea is research subsidies and killing coal aggressively in the short term with ng
            bob has it right option 3 is the best, two things at once
            but blindly paying people to install anything and everything on their roofs is not it
            if we have to keep building them at least do it in large projects with high efficiencies and cheap efficient labor and professionally installed and managed
            really tldr
            youre wrong
            solar is good
            not atm but we need to research it

          • A Real Libertarian

            And you wonder why people don’t support nuclear?

          • Bob_Wallace

            That’s an incredible amount of fail in one single post, Richard. You should be ashamed of yourself for posting that pile of misinformation.

            Did you actually make it though high school with those amazingly poor writing skills?

        • Edmond Dantes
          • Bob_Wallace

            You’re spamming Edmond.

          • Edmond Dantes

            I’m afraid I’m not. Spamming is the use of electronic messaging systems to send unsolicited bulk messages. Many people have had their lives adversely affected by this man. He seems using this platform (as well as others) extend his presence into their lives. He is of course free to do so, as I am free to inform people of the full extent of his past so that they may be able to discern for themselves his true intentions. I am merely contributing to free and open dialogue which you, of course, are free to engage with or ignore at your leisure.

          • Bob_Wallace

            Edmond, you have said your piece.

            Please do not repeat what you have already said.

            Further posts of the same information will be taken down.

          • Edmond Dantes

            That is only fair and I am grateful for the opportunity that my piece to be said.

  • Aegys87

    2025….hope time flies….by then OPEC will be extinct…

  • technopundit

    Aren’t fossil fuels also directly subsidized through tax breaks, etc.?

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