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Published on May 6th, 2014 | by U.S. Energy Information Administration

14

Renewable Electricity Generation Projections Related To Cost, Price, Policy, & Economic Conditions

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May 6th, 2014 by
 

Originally published on EIA.

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Source: U.S. Energy Information Administration, Annual Energy Outlook 2014, Issues in Focus
Note: GHG denotes greenhouse gases

Renewable electricity generation in the United States is projected to grow by 69% from 2012 to 2040 in the Annual Energy Outlook 2014 (AEO2014) Reference case, including an increase of more than 140% in generation from nonhydropower renewable energy sources. While projected hydropower generation is almost completely insensitive to alternative assumptions related to cost, policy, and general economic conditions, the level of nonhydropower renewable electricity generation varies significantly with different assumptions.

The AEO2014 Reference case is based on current laws and policies (including the expiration of laws with scheduled expiration dates), and known technology and demographic trends. Nonhydropower renewable generation projections are highly sensitive to assumptions regarding policies that affect the attractiveness of renewable technologies (such as the production tax credit for certain renewable generation technologies), the costs and performance of the technologies, the costs of competing generation sources, and general macroeconomic conditions. In order to address such uncertainties, AEO2014 includes alternative cases that provide insight regarding the direction and magnitude of sensitivities in the projections to shifts in assumptions.

These side cases include:

  • An extension of policies such as the production and investment tax credits through the end of the projection period (No Sunset)
  • The application of a $25/metric ton fee on carbon dioxide emissions that increases 5% each year until the end of the projection period (GHG25)
  • Higher/lower growth in demand for electricity resulting from higher/lower economic growth rates (High/Low Macroeconomic Growth)
  • Lower renewable technology costs (Low Renewable Technology Cost)
  • Higher/lower natural gas prices resulting from lower/higher oil and gas resource assumptions (High/Low Oil and Gas Resource)

Changing these key assumptions can significantly affect projections for nonhydropower renewable electricity, particularly in the later years of the projection. For example, in the GHG25 case, total nonhydropower renewable generation in 2040 is 83% higher than in the Reference case, and in the High Oil and Gas Resource case, total nonhydropower renewable generation in 2040 is 12% lower than in the Reference case.

Although nonhydropower renewable generation more than doubles between 2012 and 2040 in the AEO2014 Reference case, its contribution to U.S. total electricity generation is still just 16%, well behind the natural gas and coal shares of 35% and 32%, respectively. In contrast, renewables account for 24% and 27%, respectively, of total electricity generation in 2040 in the No Sunset and GHG25 cases. In fact, renewable penetration of electricity supply in both cases meets or surpasses 16% by 2020, which is the level attained in the Reference case by 2040. Some additional results include the following:

  • The responsiveness of EIA’s nonhydropower renewable electricity projections to these particular uncertainties is not necessarily symmetric. Changing these key assumptions can lead to significantly higher levels of renewable electricity generation, but generally do not result in renewable generation levels significantly below Reference case projections.
  • Changing key assumptions generally affects long-term nonhydropower renewable electricity projections to a much greater degree than near-term projections.
  • Individual renewable technologies are not proportionately affected by changes in key assumptions. Solar and wind generators are generally more responsive to assumption changes than biomass, waste, or geothermal generators.

Additional analysis can be found in the AEO2014 Issues in Focus discussion of variations in nonhydropower renewable electricity projections.

This Issues in Focus article is intended to emphasize that there is a great deal of uncertainty related to factors such as policy, project costs, and natural gas prices—and that a shift in any of these factors could significantly change EIA’s renewable projections, generally in the positive direction. However, even in the AEO2014 Reference case, EIA projects that more than 15 gigawatts (GW) of new wind capacity would be able to take advantage of the extension of the production tax credit, which is available to projects starting construction or in significant development before January 1, 2014. In comparison, recent reports from the American Wind Energy Association indicate that as much as 12 GW of wind projects met that deadline and are currently in the construction pipeline.

Principal contributor: Gwendolyn Bredehoeft

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-- the EIA collects, analyzes, and disseminates independent and impartial energy information to promote sound policymaking, efficient markets, and public understanding of energy and its interaction with the economy and the environment.



  • eveee

    Some one more responsible needs to do real projections. Lets start with this. Take a look at the new generation in the US annually. Its all gas and renewables. Last year was different, because the wind PTC was dropped. Take the numbers over several years and plot the trends based on the annual percentage growth, etc. It takes little effort to see that coal is trending down. If all the coal plants shuttered are replaced by renewables and or gas, over the next 35 years, what happens then? Those graphs would look dramatically different.

    • Bob_Wallace

      Like this?

      Renewables are increasing.

      Fossil fuels are dropping and NG is replacing coal.

      What are we fairly sure of, what is going to change the slopes of those curves over the next few years?

      1) Wind has dropped in price. A lot. In 2013 wind sold for almost 50% less than it did in 2011 and 2012. The wind line is almost certainly going to accelerate.

      2) Solar has become very much cheaper. Solar is now selling for 5 cents per kWh. The solar line should jump well clear of the horizontal axis over the next couple of years.

      3) About 200 coal plants are closing before 2020, most in the next two years. No new coal plants are being built. The coal line is heading down.

      4) We closed four nuclear reactors in 2013. We probably will hear about more closing this year. It will be a few years before any new reactors can come on line. The nuclear line will sag and probably won’t return to where it is now.

      5) Natural gas may rise as it replaces some of the coal and nuclear lost. But it won’t totally replace them as wind and solar grab larger shares and as efficiency lowers demand.

      Over the next 35 years? Trying to predict out that far is a fool’s errand.

      Look back 35 years to ~1980. There were no personal computers, internet, cell phones, digital music (outside the lab). Solar and wind were very expensive. Over the next 35 years we’re likely to invent and put in use things we can’t even imagine right now.

      Out a shorter distance. Coal will go. Nuclear will fade away. Natural gas will largely be replaced by renewables and storage. Most cars sold will be EVs. That’s what I see as likely in the 10 to 20 year time frame.

      Subject to change by new inventions.

  • doug card

    So when 25% efficient panels cost less than .75 per watt to purchase at the resi level and around .50 at utility scale and the total installed cost is $3 and $2 per watt, we will still be putting up systems at todays rates? The cost per kW will be less than .10 per watt and clean coal at about 8 cents. This could and probably will happen by 2020 or 2025 at the latest. How am I wrong? What do they see that I don’t?

  • Matt

    The only number that EIA might have gotten right are the 2005-2010 numbers, and even those you would have to double check. Any report from EIA should required a head line that starts “Another was of time from EIA”. Their 69% number which has a big base and is growing much slower than PV or wind. So just look at the non-hydro: 140% over 25 years. Head shaking.

  • MaryJLong

    However, even in the AEO2014 Reference case, EIA projects that more than 15 gigawatts (GW) of new wind capacity would be able to take advantage of the extension of the production tax credit, which is available to projects starting construction or in significant development before January 1, 2014. http://sn.im/28vubb5

  • http://electrobatics.wordpress.com/ arne-nl

    Here we go again. 140% growth of non-hydro renewables in 28 years. 140% was the growth over, waht, the past 5 years?

    *Sigh*

    Let me start with the first howler:

    “Nonhydropower renewable generation projections are highly sensitive to assumptions regarding policies that affect the attractiveness of renewable technologies (such as the production tax credit for certain renewable generation technologies),”

    No they’re not. They have started to reach grid parity. Many people and businesses are installing solar without subsidies. That means they are becoming less sensitive to policies every year. The only thing that can hold solar and wind power back is an outright ban, but I can’t imagine that something that absurd is even in their scenario’s.

    • JamesWimberley

      Your last paragraph nails it. The high sensitivity to policy only holds above grid or socket parity (absent a killer tax, as in Spain). Once wind or solar are cheaper (all things considered) than fossil or nuclear, they win regardless of policy. Growth rates are more likely to speed up than slow down. Only Citi have been brave enough to model this possibility. But it’s more realistic than the EIA gloom.

      • heinbloed

        I think the generator’s prices/wholesale prices are compared in the predictions of the EIA.
        The consumer prices are higher than these, so grid parity for consumer-owned installations should be checked.

        http://www.energymanagertoday.com/ikea-solar-project-achieves-grid-parity-0100832/

        In some places the utility prices can be matched already:

        http://www.greentechmedia.com/articles/read/The-Price-Gap-Is-Closing-Between-Renewables-and-Natural-Gas

        But back-up/storage costs have be added as well for grid supply.

        It will be the consumer to roll up the sleeves fixing PV-panels to walls and roofs.

        ——————

        Some sort of killertax is proposed in Germany as well, it looks very likely it will be introduced in August.
        The ” RE-obligation” has to be paid then by gridfeeding PV-producers (with >10kW capacity) as well, for each kWh they consume of their selfmade electricity € 0.03 cent RE-obligation will be charged. To support the Energiewende….it propably goes into arms for Ukrainia securing the interests of big energy.
        A real killertax.

  • Emmett

    Renewables growing by 69% over the next 25 years ! What planet does the EIA live on. renewables have been growing almost that much PER YEAR over the last several years.

    • http://electrobatics.wordpress.com/ arne-nl

      They are talking all renewables, including hydro, still the largest source of renewable energy and rather slow growing.

      Non-hydro renewables are growing 140% (still absurdly low).

      • Emmett

        Please go read the article again – it clearly says NON HYDRO RENEWABLES

        • Banned by Bob

          About the quality of work you expect from a Federal agency. They typically are very slow to come around to reality.

        • http://electrobatics.wordpress.com/ arne-nl

          The article opens with:

          “Renewable electricity generation in the United States is projected to grow by 69%”

          and then:

          “including an increase of more than 140% in generation from nonhydropower renewable energy sources.”

          So clearly, the 69% is all renewables (including hydro) and 140% is non-hydro renewables.

    • Omega Centauri

      No-one at EIA has any clue whatsoever about the exponential function. Why bother to link to their idiocy?

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