(The author is a Reuters columnist. The opinions expressed are
By Gerard Wynn
LONDON, Sept 10 Some western U.S. states have
already made full use of their best locations for large-scale
wind and solar power generation, creating opportunities for
neighbouring states that still have suitable sites and for
small-scale solar generation.
Renewable resources are bountiful in theory - a few tens of
square kilometres of desert could supply enough solar power for
the world's electricity needs - but that is before taking
practicalities into account.
After accounting for proximity to demand centres and
physical limits in rugged or environmentally sensitive
territory, the best sites are already taken in California,
Oregon, Utah, and Washington, according to a report by the
National Renewable Energy Laboratory (NREL), which focused on 11
western U.S. states.
The cost of exploiting renewable power will rise in these
states relative to exports from neighbouring regions, which
therefore have an opportunity.
An important limitation was that the study considered only
large-scale projects and ignored, for example, roof-top solar.
The completion of projects at the best large sites could
prompt a drive towards distributed solar power generation, as
costs for modules fall.
The NREL focus was on western states as a region with
well-documented renewable energy resource planning.
The NREL report, "Beyond Renewable Portfolio Standards",
measured "prime-quality renewable resources" by state.
It set a high bar for prime quality, as wind resources with
an annual capacity factor of 40 percent or better, compatible
with strong, steady winds; and regions with solar direct normal
insolation (DNI) of 7.5 kilowatt hours per square metre per day
or better, equivalent to the sunniest desert regions.
The United States has no federal targets to install or
generate renewable power.
Demand is driven instead by state-level targets for a
certain portion of electricity consumption to be met from
renewable sources, in the form of renewable portfolio standards
(RPS), plus various federal and local financial incentives.
At present, some 29 out of 50 states plus Washington DC have
mandatory RPS, the last of which expire in 2025.
Utilities have preferred prime, in-state resources so far.
Once these are exhausted, and to limit costs, utility
planners and regulators are expected to shift to out-of-state
resources rather than resort to lower quality, in-state options.
"California, Oregon, Utah, and Washington have already
developed most (if not all) of their easily developable
prime-quality in-state renewable resources," the report,
published last month, found.
"Their less productive renewable resources could be
sufficient to meet the balance of their forecasted 2025
requirements, but the cost is likely to be higher than the cost
of renewable power developed prior to 2012."
The study calculated whether unsubsidised renewable power
transported from so far under-exploited states would be
cost-competitive with natural gas in destination markets in
2025, after taking into account higher transmission costs.
The year 2025 was chosen as the time when all current RPS
mandates will have expired, leaving renewables entirely
unsupported, assuming that present federal tax credits are
The study assumed that all-in gas-fired power costs remained
unchanged, and that solar power costs fell by a third and wind
by a fifth, while transmission costs doubled (reflecting the
need to upgrade and construct new capacity).
It generated some very detailed results, down to the most
competitive routes to market for individual sources of renewable
For example, it calculated that wind power imported from
Wyoming could out-compete natural gas in destination markets
including Nevada, Utah, Arizona and California.
Despite having surplus prime resources, Montana wind power
exports may not be cost-competitive because of "the cost of
transmission through the rugged forests that dominate the
western part of the state", it said.
The NREL report shows that unsubsidised wind power can
compete with natural gas by 2025, in certain western states and
under various assumptions.
And it highlights the opportunities for particular states
such as Wyoming, which presently ranks fifth in cumulative wind
capacity among the 11 western states studied, according to the
American Wind Energy Association.
The report found that solar power might still need subsidies
of some kind in more than a decade's time.
But that finding depends on assumptions which can be
The NREL study ran a sensitivity analysis demonstrating that
if solar costs were just 10 percent below its reference, it
would be cheaper than natural gas in several markets.
And that was still far less ambitious than the U.S.
Department of Energy's so-called "sunshot" initiative, which
aims for a full installed cost for large-scale solar of $1 per
watt by 2020 compared with nearly $3 now.
"This is more than twice as aggressive as the cost
reductions tested in this sensitivity analysis," the NREL study
said, without explaining why it had modelled a cost much higher
than the sunshot target.
Another gap was in residential solar generation, which the
NREL study did not consider.
According to the U.S. solar trade body, the Solar Energy
Industries Association, utility-scale (over 1 megawatt) and
commercial projects each account for about 40 percent of
cumulative installed solar capacity, and residential roof-top
the remaining fifth.
The utility-scale segment is growing fastest.
But the residential market has seen the steadiest quarterly
growth and could leapfrog the others in time, depending on the
availability of finance and incentives.
The German solar market, the world's largest, illustrates
Germany pays incentives, or feed-in tariffs, which are
higher per kilowatt hour for smaller projects. There is no exact
equivalent in the United States.
According to a study by the Climate Policy Initiative
think-tank, some 85 percent of German installed solar capacity
was on roof tops as of 2010.
(Reporting by Gerard Wynn; Editing by Anthony Barker)