Western US renewables could become cost competitive by 2025

The western states of the United States could become cost-competitive in renewable solar and wind power electricity generation by 2025, suggests a new study by America’s National Renewable Energy Laboratory (NREL).

According to the report, the three-state market of California, Arizona and Nevada will possess a collective surplus of state-of-the-art solar resources by 2025, provided development is continued in the most productive locations. As a consequence, utility-scale solar production is predicted to continue to meet local demand rather than expand into the export market during this time frame.

Titled "Beyond Renewable Portfolio Standards: An Assessment of Regional Supply and Demand Conditions Affecting the Future of Renewable Energy in the West", this U.S.-focused study compared the cost of energy from a new natural gas-fired generator, built in the proximity of its customers, with the cost of renewable energy generation. Even when integration costs, transmission and the removal of federal subsidies were taken into account, renewable energy generation in western U.S. will become cost-competitive, the study found.

"The electric generation portfolio of the future could be both cost-effective and diverse," said the report’s lead author and NREL Senior Analyst, David Hurlbut. "If renewables and natural gas cost about the same per kilowatt-hour delivered, then value to customers becomes a matter of finding the right mix.

"Renewable energy development to date has mostly been in response to state mandates," Hurlbut continued. "What this study does is look at where the most cost-effective yet untapped resources are likely to be when the last of these mandates culminates in 2025, and what it might cost to connect them to the best-matched population centers."

Hurlbut’s study assessed empirical evidence and trends to achieve its forecast, taking into account several factors that can affect future electricity demand, including: consumer preferences; further improvements and technological breakthroughs in energy efficiency; future regulations and public policies, and the supply and price of natural gas.

An earlier analysis conducted by the NREL for the Western Governors’ Association provided the framework for this latter study. The early report identified areas where development of renewable energy would be the most robust, concentrated and consistent, and where it would also cause minimal disruption to local wildlife and protected areas.