Renewable energy in the US will experience “substantial” growth through 2040 as a percentage of total electricity generation, regardless of implementation of the Federal Clean Power Plan (CPP), the Department of Energy projects in its Annual Energy Outlook 2016.
Despite lower fossil fuel prices, renewable power expanded at its fastest-ever rate in 2015, thanks to supportive government policies and sharp cost reductions.
The US Energy Information Agency reported that in 2015, renewable energy sources accounted for nearly 13.5-percent of the nation’s utility-scale electrical output. This is up by more than 2-percent over 2014. Long term forecasts project renewables to move to 23% of the total electricity generated by 2040 in the most likely oil and natural gas price scenario. However, renewable energy could move to 27% of electricity generated by 2040 if we see high oil prices.
Of the renewable energy segments, wind and solar are projected to show the greatest growth accounting for most of the overall gain, followed by geothermal and biomass. As the price for solar continues to fall many project that solar could grow at the 59% rate it experienced during the last 5 years, generating exponential growth potential.
A total of 97% of wind capacity is in the utility sector. Wind capacity should grow significantly through 2022, but after the tax credits expire, the growth should slow. Because the most favorable wind resources are located in a few regions in the country, increased adoption of wind technology in these regions may be limited by the ability of regional grids to handle high levels of intermittent generation.
Geothermal is projected to increase at a faster rate than wind (5.5% verses 2.4%), but the overall size will still remain small.
The exact growth rate of the renewable energy market is difficult to predict as some of the growth will be based on the length and extent of the government subsidies, as well as the future price of oil and natural gas. However, regardless of the impact of the subsidies and future oil and natural gas pricing, the renewables energy market is projected to have significant growth through 2040.
Link to 2016 Department of Energy Report: http://www.eia.gov/forecasts/aeo/pdf/0383(2016).pdf
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