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The most recent report from the Solar Energy Industries Association and GTM Research puts into relief just how far solar has come in its penetration of the U.S. energy economy. And how difficult a year 2013 was for the other historical leader in renewable energy—wind power.
Solar made up a third of new electricity last year, while natural gas accounted for half. 2013 saw 4.75 gigawatts of installed solar capacity. More solar has been installed in the last 18 months than in the last 30 years. SEIA is forecasting continued growth in 2014, with solar PV coming in at just under 6 gigawatts of installed power, a 26 percent increase over 2013. Keep in mind that California accounted for 2.7 gigawatts of the installed power, more than half of all solar installed last year as the state leads the charge. Arizona, North Carolina, Massachusetts and New Jersey rounded out the top five states.
So, yes, state by state renewable energy mandates drove much of this phenomenon. But so did the plummeting price of solar panels and improvements in installation times and costs at both the residential rooftop and utility scale level. Average installations system prices ended 2013 15 percent below prices at the end of 2012.
The SEIA report is already presaging the future issues in solar and they’re not going to be about cost. The report reads:
Increasingly, solar is not bound by its cost, but rather by its role in the electricity sector. And as solar continues along its path toward the mainstream, its integration with the broader electricity market from a technical, market and regulatory perspective will become one of the most important issues in the industry.
The issues going forward are going to relate to energy storage, handling intermittency presented by solar/wind, and the technical challenges of integrating both utility scale power and dealing with customer erosion for utilities related to rooftop installations.
2013 tells a very different story for wind power, however. It accounted for just 7 percent of new electricity, which was massively down from 2012 when it accounted for 41 percent of new electricity in the U.S. Wind had accounted for 36 percent of new power in the U.S. over the past five years, supplying about 4 percent of the nation’s electricity.
It’s an interesting turn of events for wind power generation. Uncertainty about incentives for wind power helped drive much of the downturn in 2013. And the industry is going to have a tougher time arguing for subsidies in the future.
According to Energy Information Administration data, unsubsidized wind costs $86 per megawatt hour, cheaper than coal ($100) or nuclear ($108). When subsidized, wind is just $63 per megawatt hour, even cheaper than the current leader, natural gas ($67). Obama has called for expanding production tax credits for both wind and solar in his most recent budget but that budget is likely dead on arrival.
Despite having the second largest amount of installed wind power in the world, the U.S. installed just one gigawatt last year. The Global Wind Council (GWEC) called 2013 “another difficult year for the industry.” Though China remains the beacon of hope for wind power, installing 16 gigawatts last year, making it the biggest wind power user in the world with 91 installed gigawatts. There were also signs of an uptick in installations in India and Brazil.
Globally strong incentives in Japan and continued growth in China further aided the solar industry. Improvements in the subsidy environment for wind could help bring back wind power domestically and in Europe, where it’s been historically strong, though that’s a big ask right now given debt issues in the developed world. Still many analysts believe 2014 could be a rebound year for wind since 12 gigawatts of wind power under construction should come online.
At the end of the day, as solar power comes down in cost, it becomes an inevitable competitor for wind. What strikes me though as more remarkable is that with almost half of new power in the U.S. coming from wind and solar last year, renewable energy in general has become a major part of the future of the domestic energy economy. And who knows, if natural gas prices spike as natural gas export terminals come online over the next few years, renewables could get even more competitive.