“We are finally in a position to control our own energy future” – strong words from the president during his State of the Union address. His remarks reflect how deep changes in our nation's energy picture have profoundly changed our expectations for the future. These changes have brought us much closer to a secure, clean, and affordable energy future than most people realize.
We have heard the astounding story of how newly abundant natural gas has driven down cost in a remarkably short period, creating thousands of jobs and knocking coal plants offline. But we also heard how economies of scale and maturing industries are also pushing down cost and driving renewable energy forward in much the same way. Indeed, despite gridlock in Washington, we're witnessing the dawn of a new era of mainstream clean energy.
You don’t have to look far to find the evidence of this transformation. A report recently published by the Business Council for Sustainable Energy (BCSE) highlights that renewable energy, including wind, solar, geothermal and hydropower represented the largest single source of new energy capacity in 2012, with more than 17 gigawatts added.
President Obama noted the incredible progress the solar industry has made in recent years bringing down cost. The same BCSE report mentioned above reveals that the cost per kilowatt-hour (kWh) of solar has fallen 55 percent since 2009, even while excluding tax credits and incentives, and is well within the range of traditional energy. The impact of this price drop can be seen already, as El
Paso Electric Co. signed a twenty year agreement at the end of January to purchase solar power at half the average rate of new coal.
The president called attention to the remarkable fact that wind made up 45% of all new generation brought online last year, exceeding additions from all other fuel sources, including natural gas. Not to be outdone, the solar industry was on pace to install more than 3,200MW of new generation at the end of 2012. Duke Energy, one of the nation’s largest utilities, is projecting that continued explosive growth will
move solar into second place behind natural gas for new capacity in 2013—exceeding new generation additions of both wind and coal this year.
Looking ahead, the rise of mainstream renewables is driving such a significant transformation that the EIA is projecting renewable energy to make up a majority of all new capacity additions through 2015.
Let’s be clear about what a continued and successful energy transformation will look like. Our country is preparing to replace an aging fleet of dirty coal plants in a world where solar, wind and natural gas are all at historically low prices. And as the president rightly pointed out, these now abundant and affordable resources give us new chioces and a new level of control over our energy future.
Clearly natural gas is a critical part of the picture. In fact natural gas enables more renewable generation to be brought onto the grid, because of the reality of renewables and how the power grid works. But we shouldn’t fool ourselves into believing that simply replacing coal with natural gas is enough.
We need as much cost-competitive renewables as we can get if we’re going to make the most of our resources and take on climate change. If we get the formula right, we’ll end up with an optimal combination of solar, wind and gas that can deliver the trifecta of low emissions, reliability, and affordability.
There is still much work to be done, as wind and solar, even though rising fast, still only add up to less than 6 percent of all electric power capacity in the U.S. Meanwhile, the glut of cheap natural gas may tempt regulators and utilities to overbuild gas-fired power plants in the short term. It’s imperative we plot a thoughtful course now towards an energy future in which this ideal energy trifecta is a reality.
We are just beginning the mainstream clean energy era, but the facts show the transformation of our energy economy is already underway. To ensure we make the right use of the resources available to us, we need predictable and market-based policies that increasingly put a price on carbon – whether through legislation or emissions regulation.
I urge the president to deliver on the promise he made last night to take bold action on climate change – specifically to exert his executive authority to guide our nation's energy choices – and seize the opportunity of our newfound control of our energy future.