By Andrew Nusca
Posting in Cities
Several U.S. states can reach grid parity between 2014 and 2018, energy experts said at the REFF--Wall Street conference in New York City.
NEW YORK -- Several U.S. states, even in the Northeast, can reach grid parity between 2014 and 2018, one energy expert said on Tuesday.
Grid parity is the point at which alternative means of generating electricity are equal to or cheaper than grid power.
"Grid parity is not that far away," said Navigant managing director Lisa Frantzis. "It's only about two rate cases away. It's not 20 years out. It's right around the corner, and a lot of these utilities are becoming more and more aware of that."
In a panel discussion at the seventh annual Renewable Energy Finance Forum–Wall Street at New York City's Waldorf Astoria Hotel, cleantech experts discussed how renewable energy is viewed globally, how it impacts the greater energy mix and the driving forces behind it.
Among the panelists was Frantzis, who said despite the hype, renewables are still a small part of the global market -- roughly 12 percent worldwide -- and just 6.2 percent of the total mix in the U.S.
Reductions in production costs are driving some of the increase in market share for renewable energy, Frantzis said.
"With the federal and state incentives in place, [renewables] are very competitive with existing technologies today," she said.
Another major driver: the price of natural gas, which could derail the competitiveness of renewable technologies.
"We do see the price of natural gas going up -- probably not as much as we expected -- because of the shale gas now available," she said.
A 25 percent renewable energy standard can result in significantly more U.S. jobs supported by the renewable energy industry, Frantzis said.
"The key takeaway here is that if there were a 25 percent standard in place, there would be 274,000 more jobs by 2025," she said.
She also said that after a 50 percent compound annual growth rate globally for last five years, the forecast is unclear, thanks to "strong influence" from a German feed-in tariff that may not continue and "uncertainty" of what will unfold in China and India.
A feed-in tariff is a policy to help accelerate the adoption of renewable energy. Much like an on-ramp to a highway, the tariff helps renewable energy sources enter the market by tying the purchase prices of "green" electricity to the cost incurred to generate it. Long-term contracts ensure that utilities buy the power.
"There are some unknowns that can drive this thing one way or the other," she said.
Diving into the solar market, Frantzis said U.S. demand for photovoltaic solar power is expected to grow between 31 and 46 percent over next five years -- that's more than the global rate -- and drive the market from only 0.48 gigawatts to 1.8 to 4.9 gigawatts of capacity.
Grid-connected markets currently dominate U.S. market applications, with a 92 percent market share, she said. That includes utility, commercial and residential, though the utility slice of the 475-megawatt total in 2009 remains small.
One upside, however: utilities now qualify for the 30 percent Investment Tax Credit through 2016. "That makes it very competitive," she said.
Third parties are also in the mix, Frantzis said. "They're getting into it just to get the operational experience just in case this takes off."
Moving to the wind power market, Frantzis said there's "no question" that it's a large one, with an installed wind power capacity in the U.S. of 35,603 megawatts thanks to the addition of 10,050 megawatts in 2009, mostly in Texas, California and Oregon.
One cautionary note, however: a production tax credit could expire at end of 2012. Frantzis said that if the federal incentive isn't renewed, the wind power industry will drop from 8,000 megawatts to 2,000 megawatts per year.
Transmission issues are also "a critical piece" for the wind industry, she said. About 35 percent (or 11,000 mi.) of 200 kilovolts-or-greater lines will be needed for renewables integration, Frantzis said.
"This is needed," she said. "There is recognition that it's needed. You've got to run resources to the load centers."
Above all, it comes down to jobs creation, Frantzis said.
"There's tremendous opportunity out there," she said. "Natural gas prices and jobs creation will play a significant role in increasing market share [of renewables]."
"If every one of us in this room is not acting to have an influence on public policy -- and I would argue to put a price and cap on carbon pollution -- than we are not acting to influence the most profound market driver," she said.
"Can we separate climate and renewables? We can't separate them. I think climate is a huge driver from the perspective of financial policy, practical implications for the industry."
Overpopulation is also an issue, Lubber said. (That would seem to be in line with what legendary animal expert Jack Hanna told us in May. --Ed.)
"We live in a world where there are six billion people going to nine billion people," she said. "We don't have the resources. We also know that every day we are seeing more black swan weather events -- whether it's the Gulf or the increase in tsunamis or the earthquakes -- profound things that have an impact on our economy."
The increase in greenhouse gas emissions is causing events that cost companies millions or even billions, Lubber said.
"We're seeing a continued rise in CO2," she said. "Many companies are continuing to emit more and more carbon. The collective implications are clear: we need to change our energy mix, we need to build an energy infrastructure to be able to bring our carbon footprint down. We need to focus on the most important economic policy driver."
That starts with honest accounting and putting a price "on things that cost our society real money" -- carbon.
"Right now we are saying that carbon pollution costs us zero," she said. "We do not have a price on carbon pollution here in the United States. When something is free, you get more of it. And we are getting more of it."
"Putting a price on carbon and putting a cap on carbon is perhaps the most important thing we can make happen [to help the renewables industry]."
Also among the panelists: Milbank partner William Bice and Bloomberg New Energy Finance CEO Michael Liebreich. Read what they had to say.
Jul 1, 2010
From what I can see, grid parity just looks at the cost of producing a KWH without considering overall costs of providing that KWH to customers 24/7. Unfortunately, if you have a solar panel which is at "grid parity" with coal, it's probably costlier in terms of overall costs. For example, with solar you have to provide costly energy storage for nighttime (nobody even knows what that will be). You have to worry about cloudy days and have some mix of extra capacity or extra storage which will be overkill on sunny days. This increases the cost of actually relying on solar as a primary power source. With wind there are similar issues. The wind doesn't blow when and where you want it. That means building much more turbine capacity than you need in the hope that statistically you'll have enough turbines turning somewhere to provide the needed electricity and/or building some sort of expensive energy storage. If you have to install double the turbines you actually need to meet this statistical certainty, you've basically doubled the cost of wind even though technically you have reached grid parity. With both wind and solar you can never guarantee that at any time you will be getting the optimum output from your devices. With conventional "grid power" achieving maximum output is totally under the control of the electric utilities. This makes planning vastly simpler and effectively reduces the cost, but this is not covered in the concept of "grid parity". Or do the promoters of grid parity assume that somewhere there will be conventional grid power sources such as coal to take up the slack times of wind and solar? If so, then the concept of grid parity is a cheat that does not fully consider the true costs. The article also mentions government subsidies to renewable power. Technically, I don't think these are counted in the concept of "grid parity", but mentioning them in this context just confuses things. In short, grid parity is a bit like achieving "break even" in nuclear fusion. It's a necessary point for success, but by itself does not mean we are at a commercially viable point of replacing conventional grid power. Don't get your hopes up on the basis of "grid parity".
Another way of defining "grid parity" is that 1 KWH of power from a coal plant would cost you 31 cents - and thjat would be the same costs as from a wind farm, solar farm, wave farm, hydro etc. Right now most of those others (except hyrdo) cost anywhere from 4 to 15 times more than a coal plant - the difference is in subsidies paid to those firms to use those methods by state and Federal Governments. Oregon will pay out around $110 million per year (over 5 years) to get people to put up wind farms. Oh, and Oregon raised income taxes on a select group of people of $550 million due to budget shortfalls in this last year . . . funny how that worked out
"renewables are still a small part of the global market ? roughly 12 percent worldwide ? and just 6.2 percent of the total mix in the U.S." If 12% of the worldwide market energy market is renewable energy, the figure must include twigs and sticks used for cooking in the third-world. Millions of women and children spend 2 to 6 hours a day gathering this renewable fuel. These people desperately need sources of reliable energy, even if it is non-renewable. Thank God the U.S. mix is only 6.2% renewable. Our children can spend their days in school.
Second paragraph defines grid parity: "Grid parity is the point at which alternative means of generating electricity are equal to or cheaper than grid power." Meaning alternative renewable energy sources are equal or cheaper than current energy sources.
Folks, My apologies for not elaborating further on some of the terms used in the article. I've gone back and added explanations for "grid parity" and "feed- in tariff," as well as relevant links for more explanation. AJN
I suspect that readers of this material are smarter than the average schmo, but I have to say this is one story that is so filled with jargon that it goes over my head.