A new Energy Department study conducted by the National Renewable Energy Laboratory (NREL) indicates that by 2025 wind and solar power electricity generation could become cost-competitive without federal subsidies, if new renewable energy development occurs in the most productive locations.
The report, "Beyond Renewable Portfolio Standards: An Assessment of Regional Supply and Demand Conditions Affecting the Future of Renewable Energy in the WestPDF," compares the cost of renewable electricity generation (without federal subsidy) from the West's most productive renewable energy resource areas—including any needed transmission and integration costs—with the cost of energy from a new natural gas-fired generator built near the customers it serves.
"The electric generation portfolio of the future could be both cost effective and diverse," said NREL Senior Analyst David Hurlbut, the report's lead author. "If renewables and natural gas cost about the same per kilowatt-hour delivered, then value to customers becomes a matter of finding the right mix.
"Renewable energy development, to date, has mostly been in response to state mandates," Hurlbut said. "What this study does is look at where the most cost-effective yet untapped resources are likely to be when the last of these mandates culminates in 2025, and what it might cost to connect them to the best-matched population centers."
The study draws on an earlier analysis the lab conducted for the Western Governors' Association to identify areas where renewable resources are the strongest, most consistent, and most concentrated, and where development would avoid protected areas and minimize the overall impact on wildlife habitat.
Among the study's findings:
The study notes future electricity demand will be affected by several factors including: trends in the supply and price of natural gas; consumer preferences; technological breakthroughs; further improvements in energy efficiency; and future public policies and regulations. While most of these demand factors are difficult to predict, the study's supply forecasts rely on empirical trends and the most recent assessments of resource quality.