Western wind, solar could compete with gas in 2025 — DOE study

Source: Phil Taylor, E&E reporter • Posted: Tuesday, August 27, 2013

Renewable wind and solar power could be cost-competitive with natural gas in Western states without subsidies in 2025, when current state renewable energy standards are set to expire, according to a new federal study.

The study by the National Renewable Energy Laboratory found that wind and solar power from remote lands in Nevada, Arizona, New Mexico, Wyoming and Montana could be transmitted to urban customers for almost the same cost as power from a nearby natural gas plant.

Most of the renewable energy generation in the West has been built to satisfy state renewable energy standards, which range from Arizona’s 15 percent by 2025 to California’s 33 percent by 2020.

The 161-page NREL study looked at what renewable resources would be left when those standards expire in 2025 and what it would cost to connect them to the best-matched population centers.

The lab’s goal was to reduce some of the uncertainty that clouds long-term energy planning.

“The electric generation portfolio of the future could be both cost effective and diverse,” said NREL Senior Analyst David Hurlbut, the report’s lead author, in a statement. “If renewables and natural gas cost about the same per kilowatt-hour delivered, then value to customers becomes a matter of finding the right mix.”

Notably, the study assumes an absence of federal production or investment tax credits for renewables, which will have expired by then without congressional action.

Several factors could influence electricity demand in 2025, including the supply and price of natural gas, potential environmental regulations covering greenhouse gases and other emissions, consumer preferences, and technological innovations, the NREL study notes.

“Nevertheless, it is possible to characterize the stock of renewable resources likely to remain undeveloped after [renewable portfolio standard] requirements are met, and to do so with a reasonably high degree of confidence,” the study says.

Some notable findings include:

Wyoming and New Mexico are expected to have significant, untapped valuable wind resources remaining in 2025 that could compete favorably with natural gas if transmitted to California and other Southwestern populations. Wyoming’s wind will be cheaper to produce, but New Mexico’s will be somewhat closer to California and Arizona markets.

Montana and Wyoming could competitively supply customers in the Pacific Northwest with wind power, though the difficulty of stringing transmission lines through rugged forests of western Montana could pose challenges for the state.

Wyoming’s wind could also be an attractive option for Utah consumers.

Colorado will likely have a surplus of wind power in 2025, despite being a major demand center. However, exporting that wind to surrounding Rocky Mountain states may be challenging given the costs of transmission.

California, Arizona and Nevada will each have a surplus of solar power in 2025, though none of those states will have a competitive advantage over the others, meaning production will likely be consumed locally.

Idaho could become a hotter spot for geothermal development, considering that much of the resource in Nevada will have already been developed. Idaho’s geothermal could be competitive in California and the Pacific Northwest, though its overall capacity is expected to be small.

The study compared renewables to the cost of generating electricity locally using a combined-cycle natural gas plant, and assuming gas in 2025 costs roughly $8 per million British thermal units.

The report found that Colorado, Montana, Nevada and New Mexico each have more untapped “prime-quality” renewable resources within their borders than what is needed to meet their renewable energy standards.

Prime quality was defined as wind areas with capacity factors of at least 40 percent and solar areas with direct normal insolation of 7.5 kilowatt-hours per square meter per day.

Roughly 135 terrawatt-hours of renewable energy generation will be needed to meet Western states’ portfolio standards. An estimated 86 terrawatt-hours is currently available from renewable projects completed or under construction in the West, the study says.

The study comes as the Obama administration pursues an unprecedented expansion of wind and solar power on public lands in the West, including a Bureau of Land Management plan late last year to expedite solar development in 17 zones covering 285,000 acres in the Southwest.

The BLM earlier this month formally established a solar and geothermal power development area on a 64,000-acre strip of public and private land in Southern California that, if built out to full capacity, has the potential to produce enough electricity to power more than 1 million homes (Greenwire, Aug. 14).

Since 2009, 47 solar, wind and geothermal power plants have been approved on nearly 300,000 acres of federal land. The projects, if all are built, would have a total capacity to produce more than 13,300 megawatts of electricity, or enough to power 4.6 million homes.

President Obama in June set a goal of permitting 20,000 MW of renewable energy on federal lands by 2020 as part of a multi-pronged plan to combat global climate change.

Both solar and wind are hampered by higher costs and are more intermittent than baseload coal, natural gas and nuclear power. Renewable energy is supported by federal tax incentives and state renewable portfolio standards, among other subsidies.

According to the Energy Information Administration’s “Annual Energy Outlook,” renewable energy, excluding hydropower, will be responsible for nearly one-third of new electricity generation from 2011 to 2040.

Over that time, the share of electricity generation from renewables including hydropower is expected to grow from 13 percent in 2011 to 16 percent in 2040.