In April 2019, renewable energy reached a major milestone. For the first time, renewables generated more electricity in the United States than did coal-fired plants. Coal generation supplied 20%. Together, hydropower, solar, wind, biomass, and geothermal supplied 23%.1
Renewable energy is here to stay. In fact, its growth is set to continue:
- The U.S. Energy Information Administration (EIA) data shows that solar and wind will account for the largest share of new electricity generation in 2021. Only 3% of new generation will come from nuclear.2 Solar will add 15.4 GW capacity to the grid while wind will contribute 12.2 GW;
- In just 2018 alone, solar and wind capacity increased by 15 GW;
- At the same time as more renewables are coming online, the bulk of old power plants being retired are nuclear and coal-fired. The EIA projects that in 2021 out of 9.1 GW planned retirements, 2.7 GW (30%) will be coal and 5.1 GW (56%) will be nuclear.3
Source: U.S. Energy Information Administration, Preliminary Monthly Electric Generator Inventory, October 2020
The primary driver for this trend? The costs to install renewable generation just keep falling. As evidence, consider the following:
- Last October, the International Energy Agency (IEA) declared solar power to be the cheapest electricity in history.4
- A cross-over has been reached whereby it is now more expensive to operate 70% of U.S. coal-fired plants than it is to generate power from new renewable sources. By 2025, 86% of coal plants will be more expensive to operate than getting power from renewables.5
- A 90% reduction in solar module prices drove solar photovoltaic (pv) generation down 82% from 2010 – 2019. During the same decade, onshore wind and offshore wind generation costs dropped by 39% and 29%, respectively.6
- The IEA’s annual outlook sees world solar generation growing 43% from 2018 to 2040 because solar-pv has become up to 50% cheaper than previously expected.
Source: International renewable Energy Agency, Renewable Power Generation Cost in 2019
- In 2021, the average auction price for solar-pv power purchase agreements (PPAs) is projected to be US$0.039/kWh, down 42% from 2019. Onshore wind projects are projected to fall to US$0.043/kWh. Offshore wind is projected to drop to US$0.082/kWh by 2023.6
- Bloomberg in its 2018 New Energy Outlook reported that levelized cost of electricity from wind and solar generations were expected to decline even further for next 15-20 years.8
Source: BloombergNEF, New Energy Outlook 2018
Canada is experiencing the trends occurring in the United States. The Pembina Institute compared the cost and reliability of renewable generation to natural gas-fired generation in Alberta. They concluded that electricity from solar and wind, paired with storage capability, is not only as reliable as gas plants but also cheaper. The life-cycle cost analysis showed that renewable energy was CA$9 – CA$24 lower than gas-fired generation in Alberta where the gas prices are usually less expensive than in other provinces.7
As noted in the Pembina study, renewable energy is intermittent. Renewables do not constantly generate electricity. Battery storage helps compensate for this attribute. In 2021 batteries will provide Americans with 4.3 GW of stored electrical capacity. Worldwide capacity for stationary battery applications will grow to 235 GW by 2030, according to the International Renewable Energy Agency (IRENA).8
Renewable energy costs are declining. With higher carbon taxes in the future, it makes sense for companies to seriously explore their energy procurement options.
360 Energy helps companies determine how much they can save by switching from fossil fuels to renewable energy. Our tailored energy models can calculate carbon emission and carbon tax, the lifecycle cost of a renewable energy project and avoided costs.