July 4, 2020
The COVID-19 pandemic has likely affected every aspect of our economy, including the construction of renewable energy projects. However, even a pandemic cannot stop the continued march of renewable energy’s dominance in the U.S. energy market. On May 21, 2020, in a historical and unprecedented moment, renewable energy outshone coal by providing a higher percentage of U.S. energy consumption for 100 consecutive days. Consumption of renewable energy sources increased 1% and coal consumption decreased 15%.
Consumer demand in the face of climate change, declining costs, and the increasing imperative for grid resiliency will continue to drive the growth of renewable energy projects. According to the 2019 Cogent Reports Utility Trusted Brand & Customer Engagement™ Residential study, over 40% of U.S. consumers would choose renewable energy over fossil fuels. In a December 2019 Gallup poll, 55% of U.S. adults ranked climate change as an extremely or very important issue in the 2020 elections. Deloitte has calculated that the levelized costs of commercial-scale solar projects fell 10% in 2019. Onshore and offshore wind costs fell 18% and 24%, respectively. According to the International Renewable Energy Agency (IRENA), the power generation costs of solar photovoltaics and onshore wind decreased 82% and 39%, respectively, from 2010 to 2019.
As climate change causes more frequent and damaging weather events, utilities and consumers will increasingly turn towards renewable energy, plus battery storage, to ensure a reliable electricity supply. From September 2017 to September 2019, eleven major utilities announced major decarbonization goals. Duke Energy (the largest U.S. utility) and DTE Energy have committed to net zero emissions by 2050. Net zero emissions means that a utility is carbon-neutral - it reduces greenhouse gas emissions and invests in carbon offsets until it is emitting zero carbon. Battery storage will be vital to ensuring reliable electricity on wind-less and cloudy days. The U.S. already has a gigawatt of battery storage and the price of lithium-ion batteries has fallen 80% in the last five years.
Utilities have several methods to achieve their decarbonization goals. Investing in renewable energy projects is the obvious method. Two other critical methods are phasing out coal plants and investing in carbon removal technology. Utilities can also conduct energy efficiency retrofits on their facilities to decrease energy usage.
State-level mandates requiring renewable energy are another reason for continued growth of clean energy. Numerous states have committed to strengthening their renewable portfolio standards (RPS). California began this trend with the 100 Percent Clean Energy Act of 2018. This legislation required all state retail sales to be carbon-free by 2045. California was followed by Maryland, Massachusetts, Maine, New York, New Jersey, New Mexico, Nevada, and Washington. S&P Global forecasts that state governments must add 55,000 MW of wind energy and 45,000 MW of solar energy from 2020 through 2030 solely to satisfy their RPS requirements.
Finally, companies and utilities will be eager to take advantage of the wind production tax credit (PTC) before it expires at the end of 2020. Wind projects that begin construction in 2020 will receive a 60% tax credit. The wind PTC originally was set to expire at the end of 2019, but the federal tax bill passed in December 2019 extended it for another year.
The COVID-19 pandemic will not stop the inevitable rise of renewable energy projects. The U.S. will come out on the other side of this pandemic with a cleaner, more resilient energy economy. We must do nothing less in order to mitigate the climate crisis.