The Falling Costs of Renewable Energy: No More Excuses

1 Dec 2015 | Author: | No comments yet »

Southern Company buys planned Texas solar farm.

Historically, cost was cited as one of the primary barriers to switching from fossil-based energy sources like oil, coal and gas to renewable energy sources like solar, wind and geothermal. The Atlanta-based Southern Company is buying the controlling interest in a massive planned solar farm in Texas as the utility giant makes its first renewable power entrance into the Lone Star State.If a home or business has a rooftop solar system, most of the wattage isn’t included in the ambitious requirement to generate half of the state’s electricity from renewable sources such as solar and wind by 2030, part of legislation signed in October by Gov.

Southern Company said it bought a 51 percent stake for an undisclosed sum in the planned 157-megawatt Roserock solar facility in Pecos County near Fort Stockton. The latest addition to one of America’s largest renewable portfolios, the facility is being developed by Recurrent Energy, a subsidiary of Canadian Solar Inc., which will retain the remaining interest in the project. “Southern Power’s first solar project in Texas helps further the company’s robust wholesale business and further expands our solar footprint,” said Southern Power President and CEO Oscar C. Plummeting costs for renewable energy technologies are making a global energy transition not only possible, but actually less expensive than the alternative. Financial institutions are pressed to disinvest shares in fossil fuel industries by the “Keep it in the ground” campaign launched by NGOs and the media.

We already know the world’s renewable energy resources are abundant, eternal and have the potential to fully meet global energy needs while reducing emissions and mitigating climate change. The Roserock solar farm will provide power to the city of Austin and surrounding areas through a 20-year power purchase agreement with the municipally owned Austin Energy. The rooftop solar industry and consumer advocates say opposition to including rooftop solar in California’s renewable energy mandate came from large developers that feared competition for subsidies as well as unions that were upset because rooftop solar installers typically aren’t members.

In Australia, a country with the world’s fourth largest coal reserves, producing onshore wind energy was 14 percent cheaper than new coal and 18 per cent cheaper than new gas in 2013. The solar facility on 1,300 acres will have 700,000 photovoltaic solar panels and be able to power 30,000 Texas homes during normal conditions. “Cost-competitive, large-scale solar power has enormous potential in Texas,” said Canadian Solar Chairman and CEO Shawn Qu in the announcement. “The Roserock project and Recurrent Energy’s solar project pipeline in the state are each important steps forward as Texas approaches the more than 13 gigawatts of solar that has been forecasted across the state.” Texas leads the nation by far in wind power, but the Electric Reliability Council of Texas projects the fastest growing generation source in the state for the next 15 years will be solar.

Twenty-one states and the District of Columbia include rooftop solar panels in their mandates for clean energy, with varying benefits for participants. In Egypt, a recent tender for onshore wind generated electricity resulted in bids as low as USD 4 cents per kilowatt hour, compared to USD 7-19 cents for fossil power plants, including externalities. Although Texas only has a small portion of solar power now, a lot of projects are in the works and ERCOT is expecting to need more than 14 gigawatts of grid power from solar by 2030.

This facility will add further diversity and reliability to the Southern Company system’s generation mix of nuclear, 21st century coal, natural gas, renewables and energy efficiency. Large producers of solar and other renewable energy earn a clean-energy credit every time they send the electric grid 1,000 kilowatt hours — roughly the amount of electricity an average home consumes in a month. While the average global cost of onshore wind and solar PV fell 2.4 percent and 5.4 percent respectively in the past six months, the cost of producing electricity in a new gas or coal-fired power plant increased in all regions of the world. Southern Power and its subsidiaries own or have rights to 32 facilities in nine states, with more than 10,300 MW of generating capacity operating or under development in Alabama, California, Florida, Georgia, Nevada, New Mexico, North Carolina, Oklahoma and Texas. According to Bloomberg New Energy Finance, nuclear power costs, on average, more than three times as much to produce as wind, solar PV and small hydro in the Americas.

Given the total cost of building large generators, transmission and distributing that electricity, Del Chiaro said, utility customers will continue to see higher rates as state policy builds two sets of electricity systems — one on rooftops, the other with big-box power plants in the desert. In Europe, the Middle East and Africa (EMEA), energy from a new coal fired plant is 15 percent more expensive and energy from a new gas-fired power plant is 30 percent more expensive than onshore wind.

Kip Lipper, a state Senate staffer who helped draft the legislation setting the 50% renewable energy benchmark, said the clean-energy mandate wasn’t designed to deny rooftop solar owners but to ensure that the utilities did their part in curbing carbon pollution. As a leading manufacturer of solar photovoltaic modules and a provider of solar energy solutions, Canadian Solar has a geographically diversified pipeline of utility-scale power projects. The fact that most consumers read a constant price in their electricity bill does not help: the price does not reflect variations in supply and therefore even consumers who could react to supply variability do not. Intermittency in electricity supply combined with a retail electricity price that is constant in time forces electricity providers to back-up new wind farms and PV installations with reliable sources of energy, mostly thermal power plants burning fossil fuel.

This is causing a dramatic shift towards renewable energy worldwide, with renewable power capacity accounting for more than half of capacity additions in the global power sector since 2011. A 30% federal tax credit that has helped homeowners and businesses acquire rooftop solar expires at the end of 2016 and may not be restored to that level — and possibly not at all for residential customers.

Governments must address the most severe disincentives and energy market distortions, by improving policies to level the playing field between fossil fuels and nuclear power on the one hand, and renewable energy on the other. This translates into lower electricity prices in the wholesale market, as experienced in Germany when wholesale prices are sometime close to zero and even negative. Cheap electricity is not good for the climate, specifically because of the back-up necessity: consumers keep on consuming large quantities of electricity produced from fossil fuel to cope with intermittency. World leaders will arrive in Paris on November 30 for the final round of climate negotiations before adopting what is expected to be an historic climate agreement. The company earned the 2014 National Award of Nuclear Science and History from the National Atomic Museum Foundation for its leadership and commitment to nuclear development, and is continually ranked among the top utilities in Fortune’s annual World’s Most Admired Electric and Gas Utility rankings.

Certain statements in this press release regarding the Company’s expected future shipment volumes, gross margins, business prospects and future quarterly or annual results, particularly the management quotations and the statements in the “Business Outlook” section, are forward-looking statements that involve a number of risks and uncertainties that could cause actual results to differ materially. In some cases, you can identify forward-looking statements by such terms as “believes,” “expects,” “anticipates,” “intends,” “estimates,” the negative of these terms, or other comparable terminology. Although the Company believes that the expectations reflected in the forward looking statements are reasonable, it cannot guarantee future results, level of activity, performance, or achievements. The retired retail sales worker said the solar system has helped her avoid $80 to $90 electric bills in the hottest months and $40 to $50 bills during other months.

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