Why utilities are more confident than ever about renewable energy growth
At the turn of the millennium, only wide-eyed dreamers in the power sector would have claimed renewable energy would play a major role on the U.S. grid. Wind and solar were simply too expensive and too difficult to integrate.
Fast-forward to 2017, and that dream is becoming a reality, according to a survey of more than 600 utility professionals.
More than 80% of North American utility employees expect renewable energy to increase moderately or significantly in their service areas over the next decade, according to Utility Dive’s fourth annual State of the Electric Utility (SEU) survey.
Almost three-quarters (72%) of utility professionals see a moderate or significant increase in utility-scale wind, and more than 80% see moderate or significant growth for utility-scale solar. Distributed generation also fared well, with 83% predicting some degree of growth, albeit from a lower starting point.
Those results build on trends observed in the last three years of Utility Dive surveys, as well as the input of key industry figures. For utility-scale resources, the economics of renewable energy and natural gas were expected to be key in fueling their growth.
“Wind and natural gas are what will grow,” Mike Bryson, PJM Interconnection vice president of operations, told Utility Dive recently about his market’s service area in the Mid-Atlantic states. New coal and nuclear generation cannot compete with “the very low price of natural gas and the efficiency of new natural gas plants,” as well as the declining price of renewable energy.
The vast majority of survey respondents appear to agree with Bryson. Along with renewables, 62% expect moderate or significant growth in natural gas generation, while 79% expect to see at least moderate coal retirements in the next decade. Nuclear, on the other hand, was expected to stagnate across most of the nation, with declines anticipated in particular regions.
Consumer sentiment and improving economics for renewables are helping to drive utility interest in wind, solar and distributed energy, the survey showed, strengthening trends present in past Utility Dive surveys. But this year, respondents also indicated they were less concerned about the integration of these intermittent resources, reflecting a growing confidence in the operation of the transforming power system.
Anatomy of the power mix
As in past Utility Dive surveys, utility professionals identified large-scale renewables as a key growth area, with the trend spanning nearly every region and covering investor-owned, municipal, and cooperative utilities.
A majority of respondents in every region except one expect utility-scale wind to grow, as utility officials see it as “at grid parity with fossil fuels across much of the nation,” the survey notes. This is especially true in the wind-rich Rocky Mountain and Plains states where utility giants Xcel Energy and MidAmerican Energy have made huge wind commitments.
But Southeastern states are the greatest skeptics for the growth of renewable energy, particularly wind. More than half of the survey respondents (58%) in Southern states did not expect wind growth, which could reflect “a low wind resource in the region as well as the absence of aggressive renewable energy goals,” the survey reports.