A couple years ago at our annual WINDPOWER conference, I said wind energy had to build a bridge across the “Valley of Death” some worried would come with the planned ramp-down of renewable energy tax credits for wind and solar power in 2020.
Over the past decade, renewables have posted remarkable gains in the marketplace, driven by steady declines in their levelized cost of energy (LCOE) — down almost 70 percent for wind since 2009. As an industry, we’re committed to competing without this policy support, making us the only major energy source willing to do so. Our challenge is to keep reducing costs to offset the phase-out of renewable tax credits, or face a drop-off against traditional energy sources that remain subsidized.
Two years later, how are we doing? The Valley still looms. In this and later columns, I’ll write about the technology, trends and business models that are driving energy markets and enabling us to build our bridge. Because across this bridge lies the future of America’s clean power economy — and its promise for U.S. energy customers.
Source: U.S. EIA
Integrating Renewables on the Grid — How We’re Solving It
Latest forecasts show two energy sources trending up — natural gas and renewables. Since 2000, the parallel growth of renewables and gas has been uncanny, almost a one-to-one correlation. That’s for good reason — together they deliver great results for smoothly integrating onto the power grid. Flexible, fast-ramping gas plants complement low-cost clean power from wind and solar, which are more intermittent.
Today, combining wind, gas and solar is the dominant solution for reliably integrating utility-scale clean power on America’s grid. Wind, gas and solar are the market’s choice for 90 percent of new U.S. power capacity, and factor heavily into plans for gigawatts more clean power by leading utilities AEP, DTE, MidAmerican Energy, Rocky Mountain Power and Xcel Energy.
Customers Demand Ever-decreasing LCOE — Wind Delivering with Technology and Digitalization
Wind also continues to deliver on price. Lazard calculates wind’s unsubsidized costs are now at 3 cents/kilowatt-hour (kWh), compared to more than 4 cents/kWh for gas and solar. Today, in the U.S. wind belt, wind drops below 2 cents/kWh, making it the cheapest of all electricity generation sources — clean or fossil fuel.
Even after phasing out tax credits, cost trends show wind will remain a preferred energy choice on price. By 2030, next-generation SMART technology and digital strategies are projected to reduce wind costs another 50 percent — approaching 2 cents/kWh unsubsidized. Wind remains competitive with gas in 2020, without tax credits, and clearly beats gas on cost as early as 2027.
Good Partners for America’s Clean Energy Future
Wind and solar are good partners for building America’s clean energy future. Indeed, combined with more transmission and energy storage, scientists report that wind and solar can generate 80 percent or more of U.S. power.
Source: UT at Austin
At the state level, wind is now cheapest across a broad swath of U.S. counties. It supplies more than 30 percent electricity in Iowa, Kansas, Oklahoma and South Dakota. Nationwide, wind supports 105,500 jobs and brought in $267 million for rural communities last year from wind farm leases.
At the federal level, renewables welcome Administration efforts to reduce red tape, open federal lands and build rural transmission lines connecting energy supply with demand, an infrastructure priority that benefits all Americans.
For Markets and Millennials — Securing Bridge to America’s Clean Energy Economy
Among Millennials, demand for clean power is even clearer. Young Americans in Kansas want the same things as those in New York and Los Angeles. I know because I’m raising four of them. They aren’t afraid of what’s new and tell me to go faster. Like customers today, the customers of tomorrow want more low-cost reliable clean energy — to power their homes, businesses, video games and electric vehicles down the road.
Vestas is an energy solutions provider. We aren’t afraid of trying new ways to get the job done. The next generation of leaders at Vestas will be women and men who push beyond traditional utility business models and traditional installed technology.
Above all, we’re continuing to build new bridges, overcome challenges and reach for new opportunities to realize the promise of America’s clean energy economy.
For wind power, that future is today.