SEEING IS BELIEVING: STATUS OF
RENEWABLE ENERGY IN THE UNITED STATES
WIND & SOLAR ARE CHEAPER THAN COAL & GAS IN A GROWING NUMBER OF MARKETS
For each region, the average wind power purchase agreement (PPA) is cheaper than new coal plants ( ),
new coal and natural gas plants ( ), and new coal and natural gas plants, even without federal tax incentives ( ).1
Wind PPA data is unavailable in the Southeast region ( ).
The red dots ( ) show examples of where solar photovoltaic (PV) projects are beating out fossil projects.
The Minnesota Public Utility Commission
chose PV over natural gas because of better
economic and environmental returns.2
Georgia Power finds
PV projects with an
average price of 6.5
cents per kWh.6
Proposed PV PPA price of
5.5 cents per kWh in Utah.3
Xcel in Colorado is choosing
PV “purely on a price basis.”4
Austin Energy signed a PV PPA
at “just under” 5 cents per kWh.5
WELL DESIGNED POLICIES & TECHNOLOGICAL IMPROVEMENTS CAN CONTINUE THESE TRENDS
Prices for solar PV systems have
dropped 80 percent since 2008;
analysts expect a continued
decline in the coming years.7
New, taller wind turbines with longer
blades are able to capture more
energy and can open the U.S. up to
new areas of wind development.8
80m
140m
LONG-TERM REGULATORY CERTAINTY IS NEEDED THROUGH A PRICE ON
CARBON (LIKE A CARBON TAX OR CAP-AND-TRADE), OR GREENHOUSE GAS
STANDARDS FOR EXISTING POWER PLANTS.
Additional important policy signals include:
States and utilities should ensure that renewable energy providers have access to long-term contracts, which could
reduce the average electricity costs of wind and solar projects
by 10–15 percent. Major corporations are already taking
advantage of electricity price savings from these long-term
contracts, and are asking for access in more states through
the Corporate Renewable Energy Buyers’ Principles.9
regulations and business models to promote a flexible
power grid that uses more storage, distributed generation,
and demand response.
Federal spending on research and development in the
power sector has fallen 77 percent since 1980, while
the power industry itself spends only .05 percent of its
earnings on R&D (compared to 11 percent for the pharmaceutical industry and 8 percent for computers and
electronics). Congress should therefore increase federal
funding for research, development, and commercialization
of low-carbon and energy-saving technologies, especially
for those that could generate baseload electricity like
geothermal and concentrating solar power.
In the absence of other tools to provide long-term regulatory
certainty, EPA has used its existing legal authority under the
Clean Air Act to propose greenhouse gas standards for existing power plants. EPA should finalize these standards.
Congress should address the design flaw of renewable tax
incentives so that more of the value of the credit flows to
project developers (as opposed to third party investors)
without increasing the cost to taxpayers, for example by
making the tax incentive “refundable”.
Renewable projects can face high financing costs, so finan-
cial regulators and lending institutions should work together
to develop new investment models that lower these costs.
Bringing more renewables online can be challenging because the supply varies. States and utilities should update
ENDNOTES
1. The comparison between new wind projects and new coal and natural gas plants
was made by comparing the average price for levelized wind power purchase
agreements (PPAs) by region to the low end of the range of levelized cost of
electricity (LCOE) estimates for new coal and natural gas plants. Levelized power
purchase agreements (PPAs) represent an actual contract for future prices that has
been “locked-in” and includes the value of any federal and state incentives. The
levelized cost of electricity (LCOE) represents an estimate of the per-megawatthour cost of building and operating an electric generating plant, taking into account the project’s capital costs, operating costs, and capacity factor, among other
factors. The range of LCOE estimates for new coal and natural gas plants are based
on data from: Bloomberg New Energy Finance, January 2014, “H1 2014 Levelised
Cost of Electricity Update” and U.S. Energy Information Administration, May
2014, “Levelized Cost and Levelized Avoided Cost of New Generation Resources
in the Annual Energy Outlook 2014,” in Annual Energy Outlook 2014, accessible at
http://www.eia.gov/forecasts/aeo/electricity_generation.cfm; U.S. Energy Information Administration, May 2014, “Table 8.2. Cost and Performance Characteristics
of New Central Station Electricity Generating Technologies,”in Annual Energy
Outlook 2014, accessible at http://www.eia.gov/forecasts/aeo/assumptions/pdf/
electricity.pdf. Average regional levelized wind PPA estimates based on data from
R. Wiser and M. Bolinger, Lawrence Berkeley National Laboratory, August 2014,
“2013 Wind Technologies Market Report,” accessible at: http://emp.lbl.gov/sites/all/
files/2013_Wind_Technologies_Market_Report_Final3.pdf.
2. PR Newswire, 2014, “Minnesota Public Utilities Commission Says Solar is Part of
the Solution, Selects Geronimo’s Distributed Solar Proposal,” March 28, 2014, accessible at http://www.prnewswire.com/news-releases/minnesota-public-utilitiescommission-says-solar-is-part-of-the-solution-selects-geronimos-distributedsolar-proposal-252881751.html.
3. Eric Wesoff, GreenTech Media, June 2014, “Solar at Grid Parity in Utah, A Coal
State With No Renewable Standard,” accessible at http://www.greentechmedia.
com/articles/read/Solar-at-Grid-Parity-in-Utah-a-Coal-State-With-No-RPS.
4. Martin LaMonica, GreenTech Media, October 2013, “Xcel Energy Buying Utility-Scale
Solar at Prices Competitive With Natural Gas,” accessible at http://www.greentechmedia.
com/articles/read/xcel-energy-buys-utility-scale-solar-for-less-than-natural-gas.
5. Eric Wesoff, GreenTech Media, May 2014, “Austin Energy Switches from SunEdison
to Recurrent for 5-Cent Solar,” accessible at http://www.greentechmedia.com/articles/read/Austin-Energy-Switches-From-SunEdison-to-Recurrent-For-5-Cent-Solar.
6. Platts, October 2014, “Georgia Power Solar RFP Yields 515 MW in Power
Purchase Agreements,” accessible at http://www.platts.com/latest-news/electricpower/boston/georgia-power-solar-rfp-yields-515-mw-in-power-21392015.
7. Bloomberg New Energy Finance, 2014, Sustainable Energy in America 2014 Factbook, February 2014, The Business Council for Sustainable Energy (BCSE), accessible at http://www.bcse.org/factbook/pdfs/2014%20Sustainable%20Energy%20
in%20America%20Factbook.pdf; D. Feldman, G. Barbose, R. Margolis, T. James,
S. Weaver, N. Darghouth, R. Fu, C. Davidson, S. Booth, R. Wiser, U.S. Department
of Energy, September 2014, “Photovoltaic System Pricing Trends,” accessible at
http://www.nrel.gov/docs/fy14osti/62558.pdf.
8. J. Cotrell, T. Stehly, J. Johnson, J. O. Roberts, Z. Parker, G. Scott, and D. Heimiller,
2014, “Analysis of Transportation and Logistics Challenges Affecting the Deployment
of Larger Wind Turbines: Summary of Results,” January, NREL/TP-5000-61063,
National Renewable Energy Laboratory, Golden, CO, accessible at http://www1.eere.
energy.gov/wind/pdfs/analysis_of_transportation_and_logistics_challenges.pdf.
9. Corporate Renewable Energy Buyers’ Principles: Increasing Access to Renewable
Energy, accessible at http://www.wri.org/sites/default/files/corporate_renewable_energy_buyers_principles.pdf.
find out more at wri.org/seeingisbelieving