overview
Why Two Renewable Energy Sources Have the Wind at Their Backs
Darryle Ulama
Lead Analyst IBISWorld
Santa Monica, CA
Solar PVCs have grown commonplace, from solar farms (as shown here) to residential units that are part of distributed systems. T
he growth in domestic wind and solar energy over the past decade suggests that we may be on the cusp of a new era of energy generation and
consumption. The country’s energy mix is transforming, alongside record numbers of coal plant retirements and ballooning natural gas production. A host of regulatory and policy mechanisms have underpinned the rise of wind and solar, and these markets are now approaching maturity. Certain states, bolstered by state and local incentives, are leading the pack. Wind and solar are here to stay, and the question now is how these sources will contend with the forces that prevent them from achieving higher scale.
Solar: Lower Costs and the Rise of Distributed Systems Solar energy has been at the center of the renewable
energy conversation for years. A combination of factors—in- cluding falling technology costs, tax credits and rebates, and wider access to fi nancing—have allowed solar power to blos- som in a relatively swift manner. According to the latest esti- mates from the US Energy Information Administration (EIA), total solar energy generation (including distributed solar) has increased at an annualized 54.2% between 2005 and 2014.
Further, the Solar Energy Industries Association notes that solar supplied 40% of all new electric generating capacity in the fi rst half of 2015. California by far tops the solar energy list, claiming nearly half of the country’s solar electricity gen- erating capacity, according to the EIA. Industry revenue for utility-scale solar is anticipated to grow at an average annual rate of 75.9% to $3.2 billion in the fi ve years to 2016. The continued decline of photovoltaic prices and installa- tion costs have aided the growth of solar. Industry operators are pointing to the reductions in soft costs, the non-equip- ment costs that include systems design, labor installations, customer acquisitions, and inspections costs. This bodes well for the potential for more solar installations, as soft costs continue to represent a sizeable portion of a given solar project’s total. The Department of Energy’s SunShot Initiative aims to cut the cost of solar technology by 75% between 2010 and 2020; in 2014, just three years after launching, the program achieved 70% of its target.
Distributed generation continues to be topical in solar
power, as it threatens the traditional utility business model. In contrast to utility-scale solar, which generates and transmits a large amount of power from a single location, distributed
9 — Energy Manufacturing 2016
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