Renewable energy grows, despite subsidy uncertainty

Despite uncertainty over the future of federal incentives like the Production Tax Credit (PTC), renewable energy generation continues to grow in the United States, according to a July 14 presentation by Energy Information Administration (EIA) Renewable Analyst Gwen Bredehoeft.

At the EIA 2014 energy conference in Washington, D.C., Bredehoeft presented findings that she and EIA Renewable Team Leader Chris Namovicz have compiled. The slides from various presentations at the conference are now available on the EIA web site.

Renewables have accounted for an increasing share of capacity additions over the last decade. Renewables are increasingly competitive with traditional generation technologies, Bredehoeft said.

The market share of non-hydro renewable generation has increased in almost all states over the last decade, with nine states reaching penetration levels above 15% by 2013, Bredehoeft reported.

Policy has played an important, but not exclusive, role in renewable growth, the analyst said.

There has been much written about policy efforts that include state renewable portfolio standards (RPS) and various federal tax incentives, Bredehoeft said. But other enabling factors include net metering and interconnection rules; an expanding transmission network and improved utility forecasting and scheduling.

The rules for net metering, compensation and other grid charges are still being worked out. Meanwhile, there are indications that other policies supporting renewables are losing momentum.

The PTC has already expired and the Investment Tax Credit (ITC) is set to expire at the end of 2016. “While there have been various efforts to extend, prolong, or gradually taper, no such efforts have been successful in this Congress,” according to the Bredehoeft presentation.

No new renewable portfolio standards have been passed since 2009. There have been many recent efforts across states to weaken or dismantle existing RPS policies. In addition nearly all RPS targets have “terminal points” by 2025.

EIA data also indicates that “minimal need for new capacity” over the next decade will limit the mid-term growth of renewable energy.

California has been a leader

California has been at the forefront of U.S. renewable energy growth, California Public Utilities Commission (CPUC) Energy Division Director Edward Randolph.

In 2013 total renewable production in California was 19% of total load and the average prices were 15 cents per kWh, Randolph said.

By comparison, in 2013 total renewable production in Germany was 21% of total load and prices were between 30 cents and 39 cents per kWh, Randolph added.

With California’s growing renewable portfolio, planners are working on increased demand response; electricity storage; and regional approaches like the Energy Imbalance Market (EIM), Randolph noted in the presentation.

Solar facing ITC phase-out

Solar energy has enjoyed dramatic growth in the past few years but it could be affected by eventual loss of the ITC, said Solar Energy Industries Association (SEIA) Research Director Justin Baca.

The solar ITC is a federal tax break of 30% on investment through 2016. The commercial credit drops to 10% on Jan. 1, 2017, while the residential credit expires on that date, Baca said.

The Obama administration’s proposed carbon dioxide rules for existing power plants under 111(d) of the Clean Air Act will certainly affect renewable energy, Baca said. Likewise, the housing and financial markets will also have an impact on financing options for solar.

Photovoltaic (PV) installations were up 79% in Q1 2014 versus Q1 2014, Baca said in his presentation.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.