By Nick Greene
“The future is green energy, sustainability, renewable energy.” Former Governor Arnold Schwarzenegger made this claim during an interview in 2012, after calling out U.S. Congressional leadership for a failure to make a detailed plan for an American energy future. Years later, political discord still looms over U.S. energy policy, with foreign solar panels now subject to a tariff, and Schwarzenegger’s home state of California embroiled in a fight with the federal government over the drilling of offshore oil wells along it’s coast.
So where exactly does renewable energy stand now? Will that future Schwarzenegger predicted become reality?
After digging into some numbers, I couldn’t help but be surprised by how far the United States has progressed with renewable energy. In November of 2017, renewable energy sources accounted for 17.6% of electricity generation, consisting of hydroelectric (6.43%), wind (7.56%), biomass (1.71%), geothermal (0.43%), and solar (1.47%). With higher seasonal hydroelectric output in early 2017, that renewable electrical generation number reached as high as 19.35%. In 2012, renewables delivered a much lower 12.4% of total electrical generation.
In five years, 5% of the electricity generation of the United States has been captured by renewables, with the growth attributable to solar (0.11% to 1.47%) and wind (3.55% to 7.56%). Solar PV installation jobs have even been deemed the fastest growing occupation, with wind turbine service technician jobs taking second place. This expansion of clean energy is predicted to extend into the foreseeable future, with large initiatives continuing to make the news. For instance, Governor Phil Murphy of New Jersey recently signed an executive order to fully implement the Offshore Wind Economic Development Act (OWEDA) to deliver several gigawatts of power from offshore wind along the Jersey coast. Beyond calls for environmental stewardship, this growth is driven by the new financial allure of wind and solar.
What are the costs for renewables?
Although several factors currently limit adoption of solar and wind, in many cases, these options are cheaper than conventional energy sources for new electrical generation projects - even without subsidies. Although integration issues and battery storage are not fully accounted for in the recent Lazard study, utility scale solar PV is cheaper than coal, and is comparable in cost to gas combined cycle projects, as is wind energy. Further, renewable sources limit energy producer exposure to variability in fuel prices. Although not viable in all cases, renewables have proven to be more economical under the right conditions, especially when subsidies are utilized.
These low costs explain the large number of new wind and solar projects across the United States and will lead to a higher share of electrical generation from renewables as new energy production capacity is created moving forward.
How can companies outside of the energy sector benefit from the growth of wind and solar?
For small businesses and manufacturers, smaller scale projects may be a potential source of cost savings. Rooftop Commercial and Industrial Solar PV installations are estimated at $66 to $150 per MWH with subsidies ($85 to $194 without subsidies). Although highly variable by state, the average cost of electricity in the U.S. was $0.1043 per kWh ($104 per MWh) in 2016. Certain businesses may be able to save on electrical bills through renewable energy projects, especially in states with higher electricity costs such as Hawaii ($0.2464/kWh), California ($0.1507/kWh), and New York ($0.1445/kWh). In an increasingly environment-conscious society, branding a business as green can also lead to more customer support and boost top-line revenue.