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Renewable Energy to Be Price Competitive in Western U.S. by 2025

A new report by NREL finds that solar and wind could compete with natural gas, in the right places

2 min read
Renewable Energy to Be Price Competitive in Western U.S. by 2025

Renewable energy installations are an active business in most of the Western United States, in part due to renewable portfolio standard (RPS) mandates, which require a certain percentage of installed capacity to come from renewable sources.

But most of those RPS requirements will be met by 2025, which leaves the “what’s next?” question. The National Renewable Energy Laboratory (NREL) aims to provide the answer in its latest report [PDF], "Beyond Renewable Portfolio Standards: An Assessment of Regional Supply and Demand Conditions Affecting the Future of Renewable Energy in the West."

The report concludes that there won’t necessarily be a precipitous drop in renewable deployment after the mandates are met. There will still be population centers such markets in California, the Southwest and the Pacific Northwest whose demand for additional renewable energy will make financial sense, .

NREL found that if utility-scale solar and wind are deployed in prime areas that haven’t by then been exploited to meet the RPS mandates, the renewables, including transmission costs, could be cost competitive with new combined-cycle natural gas-fired power plants in 2025.

"The electric generation portfolio of the future could be both cost effective and diverse," said the report's lead author, NREL senior analyst David Hurlbut, 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.”

Before the states look to 2025 and beyond, they must first meet their current goals. The western states together will need between 127 and 149 terawatt-hours of renewable energy annually by 2025. California, which has the most aggressive RPS in the West at 33 percent, will account for nearly 60 percent of the demand.

Once those needs are met, NREL finds, there will still be many high quality wind sites with estimated annual capacity factors of 40 percent or better, solar sites offering direct normal insolation of 7.5 kilowatt-hours per square meter per day or better, plus all discovered geothermal resources.

Wyoming and New Mexico, in particular, will likely have a large amount of untapped wind power after 2025, the report states. Sites in New Mexico may be more prized because of their proximity to population centers in Southern California. Wyoming and Montana, however, could serve the Pacific Northwest.

Transmission costs are one of the factors affecting the value proposition of some resources. The cost of moving electricity from wind through Montana’s dense forests to the Pacific Northwest makes it less attractive; Colorado faces similar challenges in moving its own wind resources, causing NREL to conclude that they will likely be used in-state. Nevada, on the other hand, has potential solar resources that are fairly close to California, and could easily be annexed into the California Independent System Operator Network.

Another factor that could influence the price, and need, for renewables is small-scale distributed generation, especially solar panels. Though small-scale distributed generation was outside of the scope of the NREL study, “This does not diminish the importance of [distributed generation] as a long-term resource,” the study's authors wrote.

If the price of rooftop solar continues to decline, that will affect the demand for utility-scale projects meant to serve individual states as well as the need to boost transmission capacity for interstate delivery of renewable energy.


Photo: Nicholas Eveleigh/Getty Images

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