A new analysis released by the Department of Energy’s National Renewable Energy Laboratory (NREL) shows renewable energy sources like wind and solar have the economic potential to supply from 35 percent to as much as 10 times our nation’s current power needs. This is welcome news coming on the heels of the EPA releasing its final Clean Power Plan to limit power plant carbon emissions and a spate of ambitious renewable energy goal announcements. It clearly demonstrates that U.S. can affordably accelerate the transition to a safe and reliable low-carbon energy future.
In their analysis, NREL explored a range of economic potential under different scenarios (see the end of my blog for a brief description of their methods). I’m still digging into the rich amount of data presented in this report, but here are my top four quick takeaways from the analysis so far:
1. The economic potential for deploying renewable energy resources today is enormous nationally. Across the three primary cases that NREL examined, the range of results show that renewable energy resources have the potential to affordably supply from one-third to as much as 10 times total current U.S. generation (see highlighted text in Table 1). These results are in addition to the roughly 13 percent of U.S. generation that renewables supplied in 2013.
While renewables’ economic potential is substantial, it’s also worth noting that it is still a small subset (0.4 – 13 percent) of the total technical potential in the United States. Therefore, as the technologies continue to improve in cost and performance through innovation and experience, their economic potential will grow.
2. Solar and wind have the greatest economic potential. Utility-scale solar and land-based wind resources show the greatest potential for competing economically today, though distributed PV, geothermal, and hydro all show strong economic potential as well. Under these scenarios, NREL found no economic potential for deploying bioenergy resources in dedicated power plants, but they did not evaluate the economic potential for co-firing bioenergy resources in existing coal power facilities, which could be economic in some states.These finding are consistent with the actual deployment of renewable energy in recent years, with wind and solar showing record growth thanks to significant cost declines, state-level renewable energy standards, and federal tax incentives.
3. Every state has the potential to deploy cost-effective renewable energy. While the results vary substantially from state to state—as expected, resources and power prices vary as well—NREL did find that all states have economic potential to deploy one or more of the technologies they examined. In fact, under Case 2 (NREL’s more optimistic scenario), 29 states were found to have economic potential for renewables that exceeds their total state electricity generation (Figure 1). Even under NREL’s most conservative scenario (Case 3), 22 states showed economic potential for new renewables development equal to at least 25 percent of their total electric generation (Figure 2).
4. NREL’s findings validate the strong role renewables can play in helping states affordably achieve their carbon emission reduction requirements under the Clean Power Plan. In its final Clean Power Plan rule, the EPA significantly increased the role of renewable energy in setting state emission reduction targets. This new NREL analysis validates the changes that EPA made and underscores the ability of renewables to cost-effectively reduce carbon emissions.
With the Clean Power Plan rule now finalized, the states are in the driver’s seats to determine how best to cut their emissions. NREL’s new analysis is a welcome resource for them. It lays out a strong argument for states to pursue compliance plans that prioritize renewable energy over natural gas in the transition to a low-carbon power supply.
What does “economic potential of renewable energy” mean?
NREL’s analysis examines the economic potential for deploying renewable energy technologies (wind, utility-scale solar PV, distributed solar PV, hydropower, geothermal, and dedicated biomass plants) in the United States. Economic potential is a subset of the overall theoretical resource potential for producing renewable energy, after accounting for technical and cost constraints.
In this case, NREL calculates economic potential by evaluating the levelized cost of producing renewable electricity at more than 150,000 technology-specific sites and comparing it with the levelized avoided cost of energy (essentially, the cost that a utility would not have to incur from purchasing other sources of energy). Where cost of renewable energy is less than the avoided cost of energy, it is included in the economic resource potential.
Rather than examine just one set of economic potential, NREL explored a range of scenarios, including accounting for some market factors such as inter-regional transmission costs and the avoided costs associated with the environmental and public health impacts from fossil fuel generation, including carbon emissions.