Even before the Inflation Reduction Act came into play, renewable energy in the United States was breaking records. The amount of electricity generated by renewable energy hit a record 28% in April, demonstrating the growing importance of renewable energy in the U.S. energy markets.
Wind, solar and hydroelectric dams produced only 8.6% of the nation’s electricity in April 2001, according to the U.S. Energy Information Administration (EIA). However, by 2022, the share of electricity created from renewables had more than tripled to 28%.
So why the tremendous uptick?
Wind and solar are dominating the U.S. energy buildouts. In fact, wind, solar and natural gas are basically the only energy sources added to the energy grid in the last decade.
Wind and solar installations are dominating the energy sector for multiple reasons. They’re cheap, for starters. “Today, renewables are the cheapest source of power,” says International Renewable Energy Association (IRENA) Director-General Francesco La Camera in a press release.
In 2021, the cost of producing a megawatt-hour of electricity from a new wind turbine was $26 to $50. Producing the same amount of electricity from a coal plant ranged from $65 to $152 and $45 to $74 from a natural gas plant, according to Lazard, a financial advisory firm that publishes annual estimates of the cost of producing electricity. You can learn more about the competitiveness of renewables here.
Federal and state mandates and incentives also help boost clean energy usage. For example, the Inflation Reduction Act solidifies incentives until 2032 and makes ‘going green’ more economical for middle to low-income families, among other benefits.
Is April a unique month in terms of weather?
April is a relatively low-demand month due to mild weather, so less power is needed on the grid. Fossil fuel and nuclear power plants use this time for maintenance and refueling, which reduces their production.
“The numbers seen in April overstate a little bit, for now, how much renewables are contributing. But that number will increase every single year, so it’s still a balanced snapshot in terms of the changes that are taking place,” says Peter Kelly-Detwiler, an energy analyst and author of “The Energy Switch,” a recent book about the transition to a carbon-free energy economy.
March and April are also particularly windy, leaving wind turbines with more than enough energy to amp up production.
So how did renewables become so inexpensive so quickly?
We’ve previously discussed exactly why electricity from renewable sources has declined so rapidly. Though the long and short of it is that renewables follow learning curves or Wright’s Law. They become cheaper by a constant percentage for every doubling of installed capacity. Therefore, increasing the adoption of clean energy lowers the cost of electricity from new renewable power plants.
Transitioning to renewable energy creates a whole host of benefits. For example, IRENA’s latest global cost study found that new renewable energy projects added in 2021 could reduce electricity generation costs in 2022 by at least USD 55 billion.
Will the trend continue?
The EIA expects renewable energy sources to account for 22% of U.S. electricity generation in 2022–up from 20% in 2021.
According to a new peer-reviewed analysis from Lawrence Berkeley National Laboratory, the cost of electricity from renewables is expected to decline despite supply chain pressures and soaring commodity prices. The past two years have been difficult for the renewable energy industry, but the researchers expect both wind and solar to adapt and return to cutting costs again.
Researchers found that by 2035, solar could cost as little as $22 per megawatt-hour (MWh) on average. This is a steep decline from a 2020 average of $34 per MWh. Wind could hit $24 per MWh, down from $32 per MWh two years ago.
Wind and solar additions slowed in the first quarter of 2022 but will bounce back in the next three years, according to the Federal Energy Regulatory Commission. There are 66,315 megawatts (MW) of “high probability” solar additions that are expected to come online over the next three years. In addition, 17,383 MW of high probability wind for the same period, according to the FERC’s monthly infrastructure report. In total, solar and wind will account for 63% of all new utility-scale electric generating capacity added in 2022.
Some experts believe that renewable technologies like wind and solar will act as stepping stones to more advanced technologies such as small modular reactors.
Kelly-Detwiler says, “It could be that renewables are actually another transitional fuel to something else. They’re amazing resources and will help us decarbonize the grid, but are they the last chapter in humanity’s decarbonization story? I do not think that they are. I think that there will be something well beyond that because the history of humanity is constant innovation and deployment of new technology.”