Driven by a need for low-cost and minimally invasive energy solutions, renewable energy saw a considerable resurgence throughout 2019. According to the National Energy Regulatory Commission, it surpassed traditional coal, generating most of the electric power in the U.S. More specifically, wind and solar combined were responsible for 50% of the total renewable energy generated in the States.
The question is, how long will this continue? What are we looking at in terms of future growth for renewable energy?
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The Renewable Energy Outlook for 2020
As more and more states approve renewable-energy-based legislation and head-up investments, new energy solutions will appear as a result. Distributed or crowdsourced energy is quickly becoming the new norm, as homeowners equip their dwellings with rooftop solar panels, and battery backups, thus creating local microgrids.
What’s happening in the corporate world, however?
The U.S. Energy Information Administration estimates that the electricity utility-scale solar generates will grow by 17% in 2020. It also expects that over the next two years, wind generation will increase from 12% to 14%. At the same time, electricity generation across all fuels in the U.S. is projected to become stagnant throughout 2020 after dropping 2% by the end of 2019.
In other words, renewable energy is becoming more prevalent, while traditional fuel-based energy solutions are seeing a considerable decrease in usage. The reasons for why this is happening, however, are likely not what you would expect.
Public Policy Support
In the past, several tax incentives have helped encourage the growth of wind and solar energy. For instance, the Production Tax Credit (PTC) and Investment Tax Credit (ITC) both incentivize the implementation of new energy solutions.
The PTC will phase out soon, and the ITC will do so sometime in 2020. Although, a 2020 spending bill looks to extend PTC for one more year and will likely convert offshore wind applications from PTC to ITC for a year. That allows projects that begin in 2020 to have ample coverage. Yet, from a tax incentive angle, things remain uncertain, at least in the future.
All that aside, the current administration has done a lot of damage to the climate change movement, which affects renewable energy. Trump has doubled-down on support for coal, especially after pulling out of the Paris Climate Accord.
U.S. tariff policies may also cause some hiccups as we enter 2020, with tariffs up-to-30-percent levied on panels manufactured abroad. Luckily, panel costs are declining, in general, which means imported panel costs are still seeing a slight decrease despite policy changes.
Yet almost none of these negative trends appear to be affecting the growth of wind and solar energy. Why?
Resilience, Innovation and Competition Are Driving Growth
One of the major influences on renewable energy growth is the current state of the energy grid. Grid resiliency is a huge problem, as many regions are experiencing widespread outages. Issues like severe weather, natural disasters and even high demand put a considerable strain on the current power solutions. Wildfires have also been rampant throughout the year, with some even directly caused by faulty electrical equipment.
Renewable energy is an excellent solution for many of these problems because, in the face of natural disasters, it can often remain on and fully functioning. Both wind and solar systems — provided they are not damaged — will continue generating energy even after the grid goes down. With a battery backup in place, homeowners and businesses can continue to operate as usual for quite some time.
Competition is also heating up between traditional energy and renewable sources. Not only are they clean, but they are also incredibly cost-effective. The buy-in for renewable energy might be a little higher because installing the appropriate equipment can be pricey, but it more than pays for itself in the end. All the while, traditional energy costs continue to climb, making it much more necessary to seek out cheaper alternatives, especially for businesses looking to maximize profits and reduce expenditures.
Furthermore, the rampant use of modern technology is driving the need for low-cost energy solutions more than ever before. IoT and smart data-oriented technologies require constant energy to thrive, and that’s not even including the network support they need to transmit and collate data. The rise of the smart city is also imminent, with most large U.S. cities and one-third of mid-sized cities poised to implement smart city projects. The technologies at the forefront of these programs all need a reliable energy source to thrive, which means low-cost alternatives are immediately added to the table.
Corporate Renewable Energy Goals are Growing
All of it is accelerating the need for larger, utility-scale renewable energy solutions. That’s precisely why many corporations are starting to take advantage. Walmart, for example, recently signed-on to 36 solar community projects in Minnesota, all of them headed by United States Solar Corp.
In June 2019, Starbucks also announced a collaboration with a solar provider — LevelTen Energy — to utilize wind and solar energy across 3,000 of its retail locations.
The takeaway here is that large companies are starting to take notice of renewable energy’s many benefits, or really the entire business world. That alone will encourage widespread adoption, which is only exacerbated by many of the other factors evident in today’s landscape.
The bigger the movement and the higher the demand for renewable energy, the more energy providers take notice and move toward large-scale operations. More specifically, utility-scale solar and wind solutions will continue to see a rise in demand moving forward, and it may even surpass traditional power soon.