THURSDAY, JULY 15, 2021
The U.S. Energy Information Administration has recently issued an independent statistics and analysis report, revealing that large-scale U.S. solar capacity growth is expected to exceed wind growth for the first time in its history.
The Short-Term Energy Outlook document, which was released on July 7, projects that solar photovoltaic generating energy will surpass wind generated energy sometime next year. According to the EIA, the solar capacity growth in the forecast reflects various state and federal policies that support renewable energy.
Solar Energy Projections
Over the next 18 months, the EIA predicts that roughly 16 gigawatts of solar photovoltaic generating capacity in the electric power sector will be added in 2021 and that another 17 GW will be added by 2022. In addition, the agency expects that small-scale solar photovoltaic capacity will also increase by roughly 5 GW per year, with residential photovoltaic accounts making up the majority of said increase.
However, these numbers are strongly subjected to the uncertainty related to the ongoing economic recovery from the COVID-19 pandemic. While the increase in economic activity and easing of the COVID-19 pandemic has already contributed to rising energy use, research shows that U.S. gross domestic product declined by 3.5% in 2020 from 2019 levels.
The STEO assumes U.S. GDP will grow by 7.4% in 2021 and by 5.0% in 2022, according to forecasts by IHS Markit.
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The U.S. Energy Information Administration has recently issued an independent statistics and analysis report, revealing that large-scale U.S. solar capacity growth was expected to exceed wind growth for the first time in its history. |
Also outlined in the report, the EIA foresees and increase of U.S. retail sales of electricity by 2.8% this year, after having fell 3.9% in 2020. The largest forecast increase in electricity consumption is slated to occur in the industrial sector, driven by rising levels of economic output, and is expected to grow by 5.1% in 2021.
Retail sales of electricity to the commercial sector are also predicted to grow, but at a slightly slower pace of 2.1%, as some workers continue working from home instead of in office buildings. Overall, the EIA forecasts that U.S. residential electricity sales will grow by 1.9% in 2021, largely due to colder temperatures experienced in the first quarter as compared to last year, in addition to a hot start to the summer.
Generating capacity from wind turbines in the electric power sector is expected to grow by 17 GW in 2021 and by 6 GW in 2022, the EIA included in its report, though since wind capacity is often added at the end of the calendar year, increases in wind generation "frequently lag behind increases in capacity for the year they occur in" and are reflected the following year, according to the report.
The Administration attributes the wind sector’s slowed capacity growth to the expiration of the production tax credit. Previously, the credit was extended through 2020 at the end of 2019 and provided a 2.5 cent/kWh benefit for facilities entering service or spending at least 5% of total estimated project costs through the 2020 calendar year.
New additions of solar and wind generating capacity also support the EIA's forecast that the share of U.S. generation from solar and wind will rise to 15% by 2022 from 11% in 2020.
The EIA concludes that overall, the share of generation from renewable sources is expected to increase from 20% in 2020 to 21% in 2021 and 23% in 2022. The increase is projected to be mostly due to new solar and wind generating capacity expansions in the electric power sector.
Promoting Wind & Solar Energy
At the end of March, President Joe Biden announced that the White House and leaders of the Administration had developed a set of actions aimed at catalyzing offshore wind energy. The reported actions also plan to strengthen the domestic supply chain and create good-paying, union jobs.
Outlined in the jumpstart plan, the U.S. Department of Interior, Department of Energy and Department of Commerce have all announced a shared goal to deploy 30 GW of offshore wind in America by 2030, while protecting biodiversity and promoting ocean co-use. The plan involves new federal ocean tract leasing later this year or by early 2022.
In tackling the transition to clean energy and creating these good-paying, union jobs, the Interior Department’s Bureau of Ocean Energy Management has announced a new priority Wind Energy Area in the New York Bight—an area of shallow waters between Long Island and the New Jersey coast—which a recent study from Wood Mackenzie shows can support up to 25,000 development and construction jobs from 2022 to 2030, as well as an additional 7,000 jobs in communities supported by this development.
The area measures nearly 800,000 acres of potential “wind energy areas.”
Not only would the domestic offshore wind industry to meet the 2030 target by utilizing this area—New York has a target of 9,000 MW of offshore wind and New Jersey has set a 7,500-MW goal, both by 2035—there would be massive supply chain benefits as well.
According to The White House, in meeting this 2030 target, the supply chain would benefit through new port upgrade investments totaling more than $500 million; one to two new U.S. factories for each major windfarm component including wind turbine nacelles, blades, towers, foundations, and subsea cables; additional cumulative demand of more than 7 million tons of steel—equivalent to four years of output for a typical U.S. steel mill; and the construction of four to six specialized turbine installation vessels in U.S. shipyards, each representing an investment between $250 and $500 million.
To help cover these changes, the U.S. Dept. of Transportation has reported it will be making available $230 million for port and intermodal infrastructure related projects such as storage areas, laydown areas and docking of wind energy vessels to load and move items to offshore wind farms. The DOE is also making $3 billion available in debt capital, through loan programs, to support offshore wind projects, including transmission systems to link to land-based power grids.
If carried out successfully, the target could unlock a pathway to 110 GW by 2050, generating 77,000 offshore wind jobs and more than 57,000 additional jobs in communities supported by offshore wind activity.
To prepare for all these endeavors, the BOEM has announced a Notice of Intent to prepare an Environmental Impact Statement (EIS) for Ocean Wind, which has proposed an offshore wind project with a total capacity of 1,100 MW—enough to power 500,000 homes across New Jersey. BOEM anticipates that it will be initiating environmental reviews for up to ten additional projects later this year.
A final major part of the plan involves supporting critical research and development and data-sharing, in which the DOE and the New York State Energy Research and Development Authority created The National Offshore Wind Research and Development Consortium in 2018. This year, the NOWRDC plans to award $8 million to 15 offshore wind research and development projects that were selected through a competitive process.
The new projects will focus on offshore support structure innovation, supply chain development, electrical systems innovation, and mitigation of use conflicts that will help reduce barriers and costs for offshore wind deployment.
The promotion of wind energy arrived after the Biden-Harris transition team released its plan regarding climate change, highlighting the incoming administration’s early priorities during the November elections. Since its early stages, White House negotiators and a group of senators were reported to have recently reached a tentative agreement on a potential bipartisan infrastructure agreement.
Several of the lawmakers involved in the negotiations recently told Politico that the infrastructure deal is similar to an earlier framework, which outlined $579 billion in new spending. However, in comparison to the newly developed framework, a source familiar with the matter reported that that number has since been reduced to $559 billion, with the intentions to repurpose $20 billion in broadband funds.
In total, the plan outlines $974 billion in spending over five years and $1.2 trillion over eight years.
One of the largest issues when compiling the legislation was deciding how exactly the new spending was going to be paid for, as Republicans opposed reversing business tax cuts passed under former President Donald J. Trump, while Biden and Democrats were against raising the gas tax.
Under the new proposal, the infrastructure spending would be funded by a combination of increased tax enforcement, unused unemployment insurance, unused COVID-19 relief funds, state and local funds for broadband, sales from the Strategic Petroleum Reserve, among several other measures.
According to a White House fact sheet, the proposal includes:
Other infrastructure funding includes:
Tagged categories: Energy efficiency; Government; Infrastructure; Market forecasts; Program/Project Management; Solar; Solar energy; U.S. Department of Energy
