Report: Renewable Energy + Energy Efficiency To Grow Based On Cost Competitiveness Alone

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The renewable energy and energy efficiency industries will grow over the coming years “strictly on the basis of cost,” rather than simply as a result of supportive policies, according to a new report from the Advanced Energy Economy Institute.

The report argues that, while renewable energy and energy efficiency are certainly cost-effective mechanisms for compliance with EPA’s Clean Power Plan (CPP), and will see growth owing to that, they would continue to grow anyway even in its absence.

As the report from the Advanced Energy Economy Institute puts it: “Official projections of renewable energy deployment and the impact of energy efficiency on electric demand growth do not capture market realities, discounting the growth potential of these resources and the role they can play in state compliance plans for the CPP.”

“Costs are dropping fast for wind and solar power, and energy efficiency is almost always the lowest cost way to meet new electricity needs,” noted Malcolm Woolf, Senior Vice President for Policy and Government Affairs for Advanced Energy Economy, a national business association. “There is every reason to believe that renewable energy and efficiency will play growing roles in electricity markets based on price alone. They can also help states reach their Clean Power Plan emission targets at low cost.”


As noted by the report (which can be found here), Energy Information Administration growth rate projections have been shown to be inaccurate year after year — which obviously means that its projections for dates further in the future (2020, 2030, etc) are unlikely to be accurate.

As a recent press release put it: “For example, the installed generating capacity of solar power is likely to double between 2014 and 2016, based on market analyses that take into account actual projects in the pipeline. Yet in the AEO 2015 forecast, solar capacity does not double from its current level until 2026.”

The Advanced Energy Economy Institute adds: “The effect of these misperceptions can be seen in some responses to the CPP, which identified renewable energy and energy efficiency as two key sources of emission reduction in the electric power sector. Comments submitted to EPA by several states questioned their ability to develop sufficient renewable energy or to achieve energy efficiency gains on a cost-effective basis beyond what they were getting already. In modeling the impacts of the CPP, the North American Electric Reliability Corporation projected no incremental increase in energy efficiency and little additional investment in renewable energy in response to the CPP, treating a large-scale build-out of new natural gas generating capacity as the only way states could meet CPP targets.”

The report makes mention of the fact that, according to the financial advisory and asset management firm Lazard, the levelized cost of electricity from utility-scale wind energy and solar energy has fallen by large margins (58% and 78%, respectively) since 2009.

“There is every reason to believe that (renewable energy) and (energy efficiency) will continue to play an increasing role in our changing electric power system strictly on the basis of the economic value they provide. In addition, as states consider ways to comply with EPA’s Clean Power Plan between now and 2030, RE and EE measures will be competitive with other options and available to provide substantial emission reduction opportunities.”

Image Credit: Advanced Energy Economy Institute

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James Ayre

James Ayre'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.

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