Solar and Wind Are Reaching for the Last 90% of the U.S. Power Market

Source: By Nathaniel Bullard, Bloomberg • Posted: Thursday, February 11, 2021

They’ve both grown exponentially over the last 30 years. Now there’s just one more decimal place to go.

Three decades ago, the U.S. passed an infinitesimal milestone: solar and wind power generated one-tenth of one percent of the country’s electricity. It took 18 years, until 2008, for solar and wind to reach 1% of U.S. electricity. It took 12 years for solar and wind to increase by another factor of 10. In 2020, wind and solar generated 10.5% of U.S. electricity.

If this sounds a bit like a math exercise, that’s because it is. Anything growing at a compounded rate of nearly 18%, as U.S. wind and solar have done for the past three decades, will double in four years, then double again four years after that, then again four years after that, and so on.

It gets confusing to think in so many successive doublings, especially when they occur more than twice a decade. Better, then, to think in orders of magnitude—10ˣ.

There are a number of reasons why exponential consideration matters. The first is that U.S. power demand isn’t growing, and hasn’t since wind and solar reached that 1% milestone in the late 2000s. That means that the growth of wind and solar—and that of natural gas-fired power—have come entirely at the expense of coal-fired power.

That replacement of coal with either natural gas (half the emissions of coal) or with wind and solar (zero emissions) is certainly an environmental achievement. Coupled with last year’s massive drop in emissions, that power shift also makes it much easier for the U.S. to meet its Paris Agreement obligations.

But it also means that challenges lie ahead for any power generation technology that isn’t wind or solar. BloombergNEF analyzed the future of major power systems extending out to 2050, which for the U.S. shows a renewed increase in electricity demand. Total generation will increase about 30% in the next three decades, BNEF predicts. During that time, wind power generation will increase 195% and solar power generation will increase 753%.

That means a few things. Even with a growing electricity system, solar and wind will continue to crowd out every other generation technology while also competing with each other. It also means that the electricity grid—and the businesses and services that use it—will need to become both more supple and more innovative to integrate so much renewable power.

That suppleness will have to come from a more robust grid, able to send more renewable energy from places where generation is surging to demand centers. It will also have to come from energy storage, both short term (a matter of hours) and potentially long term (a matter of weeks or more).

Innovation, on the other hand, will come down to the speed at which businesses realize that zero-carbon electrons are becoming ever more abundant and less expensive. As I wrote last week, we already have moments in some grids when solar power supply exceeds total demand. That’s a challenge, but it’s also an opportunity, which I hope entrepreneurs and big enterprises alike are ready to capitalize on.

My final thought is a return to exponents. There’s only one left for wind and solar in the U.S. power system. The next order of magnitude takes us from 10% to 100%, when the entirety of U.S. power generation comes from panels and turbines.

Wind and solar are now playing for the remaining 90% of the U.S. power mix. They won’t ever reach 100%, but they will force every other energy source—including natural gas—into whatever corner of the market they haven’t filled. In doing so, wind and solar will also compete with each other. That will create a country-sized opportunity to experiment with innovative ways to use all those new electrons.

Nathaniel Bullard is a BloombergNEF analyst who writes the Sparklines newsletter about the global transition to renewable energy.