Ramp-up in U.S. is ‘economically viable’ — NREL report

Source: Christa Marshall, E&E reporter • Posted: Monday, November 23, 2015

A major increase in renewable power is “economically viable” in many parts of the United States when the social cost of carbon is taken into account, according to a new report from the National Renewable Energy Laboratory.

The analysis concludes that there is an economic potential for an additional 820 terrawatt-hours of renewable generation beyond what exists now, or the approximate equivalent of 20 percent of the current annual U.S. output of electricity. NREL said the report presents a first-ever method for measuring whether many U.S. renewables are economically viable, outside of their technical potential.

In a statement, NREL energy analyst Philipp Beiter said that declining renewable costs drove the results. “Economic potential has more than tripled as a result of cost reductions already realized for renewable generation technologies between 2010 and 2014, particularly for wind and solar PV,” Beiter said.

The lab defined “economic potential” as a threshold where the cost required to generate renewable electricity is below available revenue in terms of displaced energy and displaced capacity in locations where renewables are also considered technically viable. The concept developed from a 2012 NREL report assessing the “technical” ability of renewables to expand, considering non-cost variables like land use and system performance.

The new report “differs from many common estimates of renewable electricity potential in that it does not directly consider market dynamics, customer demand, or most policy drivers that may incentivize renewable energy generation,” NREL said. The aim is to provide a screening method to determine where renewables may be most cost competitive, according to the report.

Cost reductions in renewable energy may allow the economic potential of renewable energy to reach about half of U.S. annual generation in 2020, according to NREL. Economic potential exists for at least one renewable technology in every U.S. state, the report said.

The lab considered a range of renewable technologies, including wind, photovoltaics, hydropower and geothermal.

The social cost of carbon is an estimate of the economic damages linked with an incremental increase in CO2 emissions in a given year, according to U.S. EPA.