IEA says US set to add record 29 GW of renewables in 2020
State mandates coupled with low installation costs and expiring tax credits will boost US renewable electricity share by 25% to a record 29 GW in 2020, an International Energy Agency (IEA) report released 10 November concludes.
IEA projections show an almost doubling in renewable capacity additions in the first half of 2020 compared with the prior year, mainly driven by wind developers' rush to commission projects to meet federal tax incentive deadlines, which are due to expire at the end of 2020.
This is despite pandemic-induced lockdowns that caused power consumption, mainly from fossil fuel generation, to decline by 5%, the IEA report said.
Renewable energy is seen as one of the key approaches that countries can use to reduce carbon dioxide emissions and meet the 2015 Paris Accord on climate change to limit global temperature increase to 1.5 degrees Celsius. Although the US officially pulled out 4 November 2020, analysts including the IEA say the US has been steadily improving its renewable power profile because of the steps that individual states have taken to mandate the use of renewable sources like wind, solar and biomass.
Unprecedented solar expansion
In 2020 alone, the IEA projects the US will increase to 12.05 GW of mostly onshore wind generated power, and an unprecedented solar photovoltaic expansion to nearly 17 GW, "the highest annual increase to date."
The IEA is attributing the record solar installations to utility-scale projects, with 3.9 GW more additions than in 2019.
In contrast, rooftop solar installations will see a drop, but the IEA said the decline in such facilities will be more than offset by utility-scale installations.
The IEA credits Renewable Portfolio Standards (RPS), or the requirement that utilities purchase a certain portion of their power from renewable sources, for historic increases in solar power.
For instance, it notes the largest projects are located in states like California, Nevada and New York that have raised their RPS targets. But the report also cited Virginia, which in April 2020, introduced its standard that mandates 100% renewable energy 2050.
However, it notes that states in the southeast and southwest like Texas, Georgia and Florida also have shifted toward solar installations due to low costs and investment tax credits.
Cheapest source of power
There is no question that renewables, notably solar power, are the cheapest source of power to install and operate than their fossil fuel counterparts, according to energy analysts.
In 2021, the International Energy Renewable Association (IRENA) estimates the cost of operating existing 1,200 GW of will exceed that of installing utility scale solar power, Francesco La Camera, IRENA director general, said 9 November during an online discussion with IEA's Birol about the key role renewables will play in a sustainable economic recovery from the pandemic-induced lockdowns.
Birol agreed, saying "That is why I have crowned solar as the new king of global electricity markets."
Expiring tax credits
Installation of wind generated power in the U.S. in 2020 hasn't affected by the Covid-19 crisis, with the IEA reporting that a record 4.3 GW of new capacity was added in the first two quarters of 2020.
The main stimulants for wind capacity in the US are corporate power purchase agreeements, tax credits and renewable portfolio standards, the IEA said.
And eight months into 2020, EIA was reporting 5 GW of new wind capacity.
But IEA expects phaseout of the production tax credits with lack of access to tax equity may lead to a dip in onshore wind installations in future years though state-mandates may continue to shore up both onshore and offshore wind facilities.
Unlike the IEA, the EIA is more bullish about US wind prospects in 2020 though.
Where the IEA is projecting 17 GW of wind capacity coming online by the year's end, the EIA is estimating 23.2 GW.
The reason is that most of wind turbine installations typically come on-line late in the year, according to the EIA's November 12 edition of its Today in Energy feature.
EIA projects higher wind capacity
Based on project timelines reported to the EIA by power plant owners and wind developers, another 18.5 GW is planned to come on-line in September through December. December is typically the month with the most wind turbine additions. In the previous 10 years, EIA data show, 41% of the annual wind capacity additions came on-line in December.
The 5 GW added in the first eight months of 2020 is already more than the capacity added in the first months of any year except 2009, the EIA pointed out.
The EIA too like the IEA is attributing the more than average capacity additions in 2020 to the impending phase-out of the federal production tax credit for wind at the end of 2020, just as previous tax credit reductions led to significant wind capacity additions in 2012 and 2019.
To date, Texas has the most wind turbine capacity among states (29.1 GW installed as of August 2020). Developers in Texas expect to add another 4 GW by the end of the year, based on reported on-line dates. Project developers plan to add 2.7 GW in Oklahoma, increasing the state's wind capacity from 8.2 GW to 10.9 GW.
EIA's November 2020 Short-Term Energy Outlook shows wind's share of US electricity generation increasing from 7.4% in 2019 to 8.8% in 2020. EIA forecasts wind's share to reach 10.3% in 2021.
The EIA also expects utility-scale solar capacity to increase to 12.8 GW in 2020 and to 13 GW in 2021.
Energy analysts remain especially bullish about US renewables prospects as it has proved to be the fastest growing source of power generation with the election of Joe Biden as US president. Biden has already made climate change one of four priorities his administration plans to pursue. Biden has indicated his plan to achieve economywide carbon neutrality by 2050 and indicated his support for renewing tax credits for renewables.
Birol said the proposed clean electricity policies of Biden's administration can lead to much more rapid solar and power development.
--With contribution from Barry Cassell who wrote about EIA's wind projections for PointLogic Energy on 12 November.
- Lawyers Say US EPA's GHG threshold rule on shaky legal ground
- Questions grow on LNG’s carbon footprint, despite demand increase
- US oil, gas operators diverge on climate plans
- US states forge ahead on plans to limit power plant carbon emissions
- China fueling rebound in global carbon emissions in 2021
- Canada upgrades decarbonization plan
- Mexico slow on path to GHG reductions
- Poland’s renewable power investments on the rise