California Energy Commission Blog
A recent report by the U.S. Department of Energy finding that U.S. solar power capacity will have nearly tripled in less than three years by 2017 is a milestone not only as a technology whose time has come but also as a major shift where the embrace of solar power is a result not just of environmental principle but of practical necessity.
Ten percent of total U.S. energy consumption comes from renewables, and solar currently makes up 6 percent of that segment, according to the U.S. Energy Information Administration, and is among the fastest-growing sources of energy.
Once a cottage industry of small-scale producers, the solar energy landscape has grown and seen a number of major projects go online in recent years. Based on the recent Major Solar Projects List by the Solar Energy Industries Association, last updated in September, combined solar capacity for the more than 4,000 projects currently operating, under construction or under development stands above 72 gigawatts. To put that number in perspective, a single gigawatt, the equivalent output of two coal-fired power plants, can power 750,000 homes.
“Consumers are now starting to demand more from their energy providers and are beginning to play a more active role in their interaction with the grid, which is ultimately changing the way utilities are serving them,” John Berger, CEO of Sunnova, told Seeker. “As a result, we are currently witnessing the beginning of the greatest shift in the electricity industry that we’ve seen during its 100-plus year existence. It’s also the biggest shift we’ve seen in the energy industry since oil started to be used in transportation 100 years ago.”
States like California provide solar energy companies the political and geographic advantages to operate and expand. Last year, the Solar Star project (in Los Angeles and Kern counties) was completed, bringing online a 579-megawatt solar plant. The Desert Sunlight Solar Farm, a 550-megawatt solar power station in the Sonoran Desert, was also finished in 2015. The year prior, the Topaz Solar Farm, a 550-megawatt solar plant San Luis Obispo Count, became fully operational.
The solar energy market in Hawaii, a state that generates more solar electricity per capita than any other state in 2015, is “one of the shining lighthouses of what’s possible on a state-level basis,” Alan Russo, senior vice president at REC Solar, tells Seeker. Solar energy adoption rates in Hawaii are among the highest in the nation, Russo adds, in large part because the utility costs are so high. Hawaii traditionally has had to import most of its energy and is the first state to legally commit itself to generating 100 percent of its energy from renewables in 2045.
But solar is even growing in states with competing energy interests from traditional sources. Take Texas, for example. “Texas, a traditionally oil and gas state and subsequently a wind state, is leading the way in new utility-scale solar projects,” Berger notes of the Lone Star state, where Sunnova is based. “Texas is currently the fastest growing utility-scale solar market in the country, and by the end of 2016, the state’s total installed solar capacity is expected to more than double.”
The reason for the growth of solar isn’t simply one of environmental conscience but also cost. “Solar costs just a small fraction of what it did even a few years ago,” notes Eli Hinckley, head of the energy group at Sullivan & Worester. “In addition to the absolute price drop, the cost is certain, basically just the price of installation.”
As the spread between the price of renewables like solar closes with that of traditional energy sources like oil and coal, the decision to move to solar power becomes more enticing to both consumers and businesses, the latter of whom have the added benefit of touting their green credentials to the former.
“Kind of like the IT transformation back in the ’90s versus where it is today, solar is going from — or renewables in general are going from kind of an esoteric, technology-driven decision to a mainstream provider of business value,” Russo said. “With that, it’s becoming less a matter of ‘Do I do it?’ vs. ‘How much do I do it?’ ‘When do I do it?’ and ‘How do I do it?'”
And it’s not just in the United States where the cost of renewables is becoming more competitive. Take the example of Abu Dhabi, whose government just received bids for the construction of a large solar farm. “Prices were as low as 2.42 cents per kWh,” Hinckley said. “That is less than it costs to generate power from some coal and gas plants that are already built and is a fraction of what it would cost to build and operate a new fossil fuel plant.”
The move by Abu Dhabi, a major player in energy markets, has chosen solar over natural gas, of which it controls nearly 5 percent of global reserves, represents “an enormous shift in the perception of solar as the future of energy,” Hinckley said.
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