Blow Me Over: The Tipping Point for Wind Has Come

(3BL Media/Justmeans) - Among the many things to be thankful for this holiday season is the fact that renewable energy finally has a legitimate place at the energy dinner table. No longer the poor cousins, hoping for an invite, wind and solar are on the guest list and they’ve brought a dish to pass.

We know that prices have been coming down. This year, a number of utility companies have made power purchase agreements for solar and wind at prices below natural gas, which had only recently underpriced coal. It’s true that these rock bottom prices were helped along by subsidies that are set to expire soon. Uncertainty over whether or not the Production Tax Credit would be renewed has hampered wind development this past year, which is why analysts continue to argue for a carbon tax.

But, prices are coming down to the point where renewables can be competitive without them. Here are a couple of examples.

Austin Energy signed a 20-year deal this spring for solar power at less than 5 cents a kilowatt-hour. American Electric Power (AEP) ended up tripling the amount of wind power they bought when they saw how low the prices were. Jay Godfrey, AEP’s managing director of renewable energy called it a “blue light special.” Those large purchases came despite the fact that Oklahoma does not have a renewable portfolio standard requiring utilities to by a minimum amount of renewable power. They did it because it was good business.

A study by investment banking firm Lazard shows solar available at 5.6 cents per kWh. That compares well with natural gas at 6.1cents and coal 6.6 cents, None of these come close to wind, which is now down to 1.4 cents per kWh. Even without the subsidies, wind is still 3.7 cents, while solar, which has not scaled up like wind has-- goes up to 7.2 cents.

This has led to a significant amount of new installations. So far this year, wind has represented 22% of new capacity, with solar kicking in another 18%. Altogether, renewables accounted for about 45% of new capacity (see chart) for the year, with the trend heading upward for renewables. Last month, wind power alone, with new projects coming online in Colorado, Kansas, Michigan, Nebraska and Texas, accounted for more than two-thirds of all added capacity. Altogether, renewables accounted for more than 84% of 829MW that were added.

Momentum is building and incentive programs as well as renewable standards have helped to create this. Now there is a backlash taking place at the state level, with legislative proposals drafted by the oil-friendly ALEC group being put forth. One of these was passed in Ohio earlier this year, which some say will set that state back in its efforts to modernize its energy supply. A second proposal has also been raised in Arizona. Most of these are quiet, back room deals that citizens are not even aware of. It’s not at all clear if, given the light of day, these proposals drafted to serve a very narrow (and well-funded) constituency would be approved. Most Americans recognize the multiple advantages of clean energy, which is why the segment continues to prosper while providing inexpensive, carbon-free, domestically produced energy to a large segment of the population.