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All Your US Renewable Energy Questions, Answered

A decade ago, the potential for renewable energy technologies to reach large-scale deployment was uncertain. Today, more and more solar panels dot roofs across the United States. Wind turbines supply electricity to millions of homes. Iconic American companies are demanding greater access to cost-effective, renewable energy. And this past summer, the Environmental Protection Agency (EPA) announced its Clean Power Plan, a regulation that will further reduce states’ power sector emissions and drive a shift toward low-carbon energy sources.

This rapid change brings questions on how electricity customers' bottom lines will be affected. Here, we break down recent developments, common misconceptions and emerging trends in renewable energy in the United States.

What does the new Clean Power Plan mean for states' energy mixes?

The new EPA rule aims to reduce national power sector emissions by about 32 percent from 2005 levels by 2030. Rather than cutting emissions at individual power plants, the regulation empowers states to reduce emissions throughout their power sectors, such as by increasing their use of renewable energy or boosting efficiency. WRI research found that many states are already in a good position to achieve deep reductions in CO2 emissions from their power sectors just by following through on current energy and efficiency policies and capitalizing on existing infrastructure opportunities.

Will electricity customers bear the cost of transitioning to more renewable energy?

A 2014 report from Lazard showed that wind energy actually has the lowest cost per energy produced of any new generation technology in the United States – $37 per megawatt-hour (MWh) in some locations, without subsidies. Even adding additional factors such as other power plants balancing the variability of wind energy (~$1/MWh) and the cost of integrating a wind farm into the electricity system ($5/MWh) only brings the cost to $43/MWh – well below the lowest estimate for a natural gas plant. Another report developed by Bloomberg New Energy Finance shows that in 2014, wind power prices were below the equivalent electricity price in five out of seven regions.

These aren’t the only studies to claim that electricity customers stand to benefit from renewable energy. Reports by the New York Independent System Operator (NY ISO), Synapse Energy Economics and the National Renewable Energy Laboratory (NREL) indicate that increasing renewable energy generation has the potential to save American electricity customers tens of billions of dollars a year over the current mix of electric power options. In North Carolina, rates are expected to be lower in the first two decades of the state's clean energy policies compared to traditional fuel sources, according to a 2013 RTI International report. In Michigan, DTE Energy lowered its electric rates in 2014 for residential customers by approximately 6.5 percent, citing low-cost wind energy as a main reason. In Minnesota, a plan for 100 MW of distributed solar was chosen over a natural gas project because the “proposal amounts to a savings of $46 million of net present value…”

Are states rolling back their commitments to renewable energy?

States can adhere to the Clean Power Plan by employing new technologies and drawing on existing tools, like renewable energy portfolio standards (RPS), state mandates on how much energy must be provided from renewable sources. Currently, 29 states and the District of Columbia have RPS policies in place.

Recently, a discourse has surfaced around more and more states considering rolling back these standards, citing a correlation between higher electricity prices and states with an RPS in place. However, this correlation doesn’t necessarily mean that state RPS’s cause higher electricity prices. Many factors cause higher prices, including aging electricity generation fleets, transmission and distribution constraints, limited infrastructure or resources, etc.

While some states have backed down from their renewable commitments, data compiled by the Center for the New Energy Economy shows that over the last three years (2015, 2014, 2013) the number of bills introduced to increase a state’s RPS have been slightly higher than the number of bills introduced to rollback a state’s RPS. Few of these bills have actually been passed, but of those that have been enacted, the same number increased a state’s RPS as rolled it back.

Is investment in renewable energy up or down?

Investment in renewable energy globally, and clean energy more broadly, has grown dramatically over the past decade, despite some recent claims. Investment in clean energy—which includes traditional renewable energy sources like wind and solar as well as energy storage, fuel cells and other advanced technologies —grew from roughly $60 billion in 2004 to an all-time high of more than $317 billion in 2011. Last year, global investment in clean energy grew 16 percent over 2013 levels to $310 billion, bringing us back near 2011 levels. New investment specifically in renewable energy in the United States has grown from $5.4 billion in 2004 to $38.3 billion in 2014—an increase of more than 700 percent— but is still below the high mark of $50 billion reached in 2011.

The decline in investment can be attributed in part to declining cost of renewable energy. As the cost continues to fall, more renewable energy can come online for less money, so the recent leveling-off of investment isn't necessarily a bad thing. In fact, it can indicate progress. Last year, a combined total of 100GW of wind and solar energy was added to the global electricity mix—the most ever—and it was cheaper than it was in peak investment year, 2011. In 2014 in the United States, the solar industry experienced it’s most successful year to date, installing almost 7 GW of capacity. The wind industry experienced a significant bounce-back from 2013, increasing installed capacity by more than 300 percent.

Which is the cheaper option for individual customers: renewable energy or traditional electricity?

It depends significantly on a number of factors, including the renewable resources at a given location, electricity prices in that area, and the type of electricity customer. However, renewable energy is increasingly the cheapest option for individual electricity customers, a reality that will apply to more and more Americans as the price of wind – which reached an all-time low in 2014 – and solar – down 9-14 percent year-over-year as of Q1 2015 – continue to fall.

For example, a 2013 study from the National Renewable Energy Laboratory found that 40 percent of U.S. supermarkets were located in a utility service area where commercial-scale solar systems would either save the supermarket money or break even against the traditional electricity supply. Similarly, a 2014 report showed that between 30 to 60 percent of U.S. public and private (K-12) schools could save money by installing solar at a price of $2-$2.50/W, assuming a 30-year lifespan.

However, these comparisons are complex and depend highly on location. Having the tools to accurately compare electricity supply options to determine the most efficient and cost-effective option is crucial for electricity customers, as well as decision-makers, policy experts, investors and regulators. WRI's fact sheet series helps break down which options should be compared, how to do so, and additional factors that should be taken into account.

What about large energy consumers in the private sector?

Corporations are increasingly seeking renewable energy. In the first half of 2015, corporations signed deals for more than 1.3 GW in new wind farms and solar plants—already surpassing the 2014 number of 1.2 GW. Some recent, notable deals include Google and Walmart’s contracts for wind energy and Apple’s contract with a solar project. The rest of corporate America may not be far behind, with 60 percent of Fortune 100 companies having clean energy goals.

More and more companies are demanding access to more cost-effective, clean power from their energy suppliers via WRI and WWF’s Corporate Renewable Energy Buyers' Principles. Since its launch in late 2014, the number of companies signing on to the Principles has doubled to 34 companies. In total, these companies need 20 million MW hours of renewable energy – enough to power more than 1.8 million homes—to meet their near-term goals.


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