America…The New “Generation”

THE ANSWER, MY FRIEND, IS BLOWIN’ IN THE WIND

We have well documented the EPA ruling on the Clean Power Plan. The forced closures of so much generation capacity has left many areas scrambling to identify how they plan to replace that power. With the overall demand for electricity rising every year, new cleaner plants are needed in most regions of the U.S. It appears our country has decided to develop solutions for this out of thin air.

The U.S. Energy Information Administration, (EIA) has reported that a little more than a quarter of all scheduled generation in 2016 will come from wind. This comes on the heels of 2015, where wind energy was the largest single source of new electric generation capacity. The 8.6 (GW) of capacity was more than that of both solar and natural gas.

The growth of wind power as a viable option for build out is mainly due to the cost reduction of more than two-thirds in the past 6 years. That now makes wind generation the cheapest form of new generation. In a world where solar energy is the hottest topic in generation circles, wind has quickly become the cheapest, and quickest ways we can reduce carbon emissions.

Utilities as well as others in the power sector are turning to wind energy for 2 main reasons. He first is the extraordinarily quick turnaround time to build it out. The second is that unlike most of Americas generation plants, the price of the energy produced from wind is extremely stable. This is due to having no volatility in fuel prices that cause the wild fluctuations in the cost of the electricity.

The belief is that more projects like wind will help utilities diversify their generation portfolios, which h should lead to cheaper energy for consumers. There are currently more than 500 factories in 43 different states that are creating taller turbines, with longer blades that are allowing these stations to capture more power. These larger scale turbines have made it more cost effective for new areas of the country to turn to wind as a viable solution to quickly produce more capacity in areas where it is needed.

Even areas like Texas, which has always been a heavily natural gas fueled state, saw wind meet almost 45% of its overall demand last December. The Department of Energy is projecting that wind energy (at its current pace) will supply 20% of all U.S. electricity by the year 2030.

Bloomberg YouTube Video

Here Comes the Sun

However, wind is not projected to be the biggest generation addition in 2016. Utility-scale solar projects are planned to make up more than 36% of new capacity in 2016. The 9.5 (GW) of solar installations is more solar generation than has been installed in the past 3 years combined. 2016 will be the first year that solar energy will surpass any other single source of new generation in the U.S. The largest installs are planned in 5 key states. California, North Carolina, Nevada, Texas and Georgia are at the top of the list, and this doesn’t even include any distributed generation such as rooftop solar projects.

So called Rooftop solar is making a big push this year fueled by the same federal tax credits and incentives that were available in 2015. With solar and wind making up more than half of all new generation that will come on line this year, this reflects a major change in thinking and planning by the energy sector. Regardless of what becomes with the Clean Power Plan, the energy industry has drawn a line in the sand and decided to focus their efforts, as well as their resources in clean renewable energy.

We are Still Full of Gas

Over the last 20 years, the largest capacity additions have been natural gas fired generation. 2016 will be no different with 30% of all new generation planned to be natural gas plants. As our country has slowly moved away from coal, natural gas fired generation has taken hold. Last year marked the first time in our countries history that natural gas surpassed coal. Based on the new installations planned this year and beyond, it is a statistic that most likely will not change.

Our country has a glut of natural gas like we have never seen before. With the advent of fracking shale reserves, we have found a string alternative that has allowed us to comfortably turn away from dirty coal, and move towards cleaner, cheaper and more stable means to produce the electricity our country needs.

We are About to Go Nuclear Again

Rounding out the major generation projects that are planned for 2016 is nuclear. Later this year, in southern Tennessee, the Tennessee Valley Authority will bring the Watts Bar 2 facility online, with plans on it becoming commercially operational in June. When that happens, it will mark the first nuclear reactor to come online in the United States in 20 years. (Watts Bar1 came online in May of 1996)

What this all means is that as the world changes, as does the ways we use and need energy, the power industry is answering the bell. With a plethora of newly developed technological breakthroughs, we are identifying, and implementing new exciting ways that we can produce energy, without destroying our planet as a by-product.

As time goes on, the plan is to continue to develop even cheaper ways to bring renewable energy generators online. At the rate we are going, coal, which was our main generation fuel source for more than a hundred years, may be relegated to only being used for bad children at Christmas.

For more information call one of our senior energy advisors at: 1-888-407-3152

Matt Helland
SVP Customer Relations
North American Energy Advisory

Sources:
http://www.awea.org/
https://www.eia.gov/
http://www.bloomberg.com/