Renewables to account for two-thirds of U.S. energy capacity in 2021

Jordan Smith
By Jordan Smith March 5th, 2021
For business

Energy capacity in the U.S. is turning to renewables.

Solar and wind power will account for 70 percent of new electricity generation capacity across the country in 2021. This is according to findings from the Energy Information Administration. Renewable sources will cover more than two-thirds of the 39.7 gigawatts of new capacity. This provides further confirmation of how the electric grid is changing.

Analysts project utility-scale solar will add 15.4 gigawatts to the grid this year. This would be a new record following the 12 gigawatts added in 2020. An additional 4.1 gigawatts of small-scale solar facilities will also come online. More than half of the utility-scale solar power will come from four states. These states are Texas (28 percent), California (9 percent), Nevada (9 percent), and North Carolina (7 percent).

Wind power will account for 12.2 gigawatts of generating capacity. More than half of this growth will come from Texas and Oklahoma. This marks a decline from the 21 gigawatts of wind power connected to the grid in 2020. Further, the 12-megawatt Coastal Virginia Offshore Wind project should begin operations this year.

The dramatic expansion of solar and wind power also benefits battery storage facilities. Batteries are increasingly paired with wind or solar power sites to improve their reliability. The EIA estimates that total battery storage capacity on the U.S. grid will increase four-fold during 2021 as batteries with 4.3 gigawatts of capacity come online.

By contrast, energy sources unable to compete with cheap natural gas and renewables are being squeezed out. More than 5 gigawatts of nuclear power generation will close in 2021. This equals 56 percent of proposed power plant retirements. 30 percent of retirements are coal-fired plants.

Analysts expect growth of renewables to accelerate

This year’s expansion of renewable energy assets across the U.S. grid is impressive. But analysts anticipate that it is just the beginning of a major shift in the energy market. Manan Ahuja, North America power analytics manager at S&P Global Platts, explained that this is clear from the approved projects in the transmission queues of the regional grid managers across the country.

“The trend is likely to continue as there is plenty of solar, wind and storage capacity in the queue,” said Ahuja. “So, absent dramatic weather patterns, the renewable generation should also increase with increasing installed base of renewables.”

Authors of a report published by consultancy firm Deloitte in December point to some of the factors driving the growth of renewables. They also drew attention to the growing interest from investors in the sector.

“Rising state renewable portfolio standards, increasing levels of corporate and residential demand, and improving economic competitiveness continue to be the key drivers for utilities and other energy companies’ interest in renewables,” they wrote. “Federal support, mandates, and stimulus could provide additional drivers in 2021. The renewables segment continues to capture a significant share of deal activity in the power and utilities industry: 144 of the 174 merger and acquisition deals announced through early December involved renewable energy assets or companies.”

Ahuja added the stimulus bill in Congress will include an extension to federal tax credits for renewable energy projects. This would provide another impulse to their future growth.

Texas and California lead renewables transition

Texas and California are two of the leading states in the development of renewable power generation. In the Lone Star State, wind power generation surpassed coal on an annualized basis for the first time in 2020. Wind accounted for more than 22 percent of energy on the grid. Solar power remains a tiny fraction of the grid, but close to 5 gigawatts of utility-scale solar should come online in 2021.

According to Texas grid manager ERCOT, 95 percent of the new projects planned to connect to the grid in the coming years are either wind, solar, or battery storage.

In California, where a large solar sector already exists, one of the largest areas of expected renewable energy growth for the future is in distributed energy resources (DERs), according to Southern California Edison. DERs are small-scale solar and battery installations operating in residential and commercial settings and include the power stored in electric vehicles.

“We’re reaching a threshold where distributed energy resources add up to enough megawatts to matter,” explained Brattle Group Principal Ryan Hledik. “And the idea of managing them in an aggregated coordinated way is being taken more seriously now.”

 

Jordan Smith is a freelance journalist and translator covering issues related to energy, the environment, and politics. His work has appeared on the independent news site Opposing Views and at the Canadian Labour Institute.

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