The Obama administration’s new Clean Power Plan, released Monday, is being heralded as a “game-changer.” In fact, a better description is that it’s trying to cement changes already occurring in how we get electricity, and in particular, the stunning recent boom in solar energy — as well as in wind.
In fact, the renewables boom has come on so fast in the United States that it actually appears to have allowed the EPA, and the Obama administration, to make the final Clean Power Plan more ambitious than its draft version, released a year ago. The final rule will achieve a projected 32 percent reduction in U.S. power sector greenhouse gas emissions below 2005 levels by the year 2030 — as opposed to a 30 percent reduction in the 2014 proposed rule.
Similarly, the EPA now expects 28 percent of U.S. electricity capacity to be provided by renewable sources like solar and wind in 2030, up from 22 percent in the 2014 rule, according to an administration fact sheet.
“Our country’s clean energy transition is happening faster than anyone anticipated — even as of last year when we proposed this rule,” said EPA administrator Gina McCarthy on a press call with reporters Sunday. “The accelerating trend toward clean power, and the growing success of energy efficiency efforts, mean carbon emissions are already going down, and the pace is picking up.”
Indeed, it appears that in the time interval between the releases of the proposed and finalized Clean Power Plan, EPA went back and took a second look at the clean energy industry in this country — and was impressed by what it saw. Adding this into the models and assumptions behind the Clean Power Plan then seems to have led to a projected future in which renewables come online more quickly.
More specifically, EPA said in the new finalized rule that it switched from using a 2013 report by the U.S. Energy Information Administration to a 2015 report by the National Renewable Energy Laboratory to gauge trends in “cost and performance” for renewables. The agency thus concluded that “[renewable] technologies, particularly wind and solar, have realized gains in cost and efficiency at a scale that has altered the competitive dynamic between [renewable energy] and conventional resources.”
The Solar Energy Industries Association Sunday released an exultant press release that summed up some of the trends, including the fact that the industry now employs almost 174,000 people in the United States, and that the cost of installing residential solar has dropped by half since 2010 alone.
If you look at the net amount of energy being generated by solar, it, too, is growing rapidly. According to recent data from the Energy Information Administration, from 2013 to 2014, the net amount of electricity generated from solar more than doubled. And that’s in only one year.
According to Rhone Resch, president and CEO of the Solar Energy Industries Association, the industry’s consultations with the EPA over the last year helped lead the agency to see just how big the solar boom is. “What the solar industry has done in the last year is to spend time with EPA educating them about the solar market, both the size, the residential and commercial installations, as well as how rapidly the cost has come down,” says Resch.
Following the release of the proposed version of the Clean Power Plan last summer, the solar industry filed comments to EPA, suggesting that the agency was underestimating solar growth, particularly in the realm of rooftop or residential solar.
“We were not surprised to see EPA substantially increase the contribution of renewables in meeting Clean Power Plan rules,” said Malcolm Woolf, head of policy and government affairs for Advanced Energy Economy, a national business group that contains a number of clean energy and energy efficiency companies as its members, in a statement. “The approach to calculating the contributions from renewables under the proposal badly understated the current size of the renewables fleet and the growth trajectory of this industry that is driven by customer demand and rapid cost declines that have made these technologies cost competitive today.”
It’s not just solar — the wind industry is also seeing a considerable boom. “Thanks to technological improvements and greater domestic manufacturing, we’ve seen the cost of wind energy decline by more than half over the last five years,” says Michael Goggin, senior director of research at the American Wind Energy Association.
Three states, according to AWEA, now get more than 20 percent of their electricity from wind — Iowa, South Dakota, and Kansas. From 2005 to 2014, AWEA adds — based on data from the U.S. Energy Information Administration — wind went from accounting for less than half a percentage of total U.S. electricity generation to nearly 4.5 percent.
On a press call Monday, the EPA’s Office of Air and Radiation acting assistant administrator Janet McCabe confirmed that one reason for the final Clean Power Plan’s more ambitious targets is indeed more bullish projections for the growth of renewables. “The costs are coming down and the pace of construction of these activities is picking up,” she said.
The agency, in the final rule, also cited the fact that even traditional power companies are starting to generate more and more of their energy from renewable sources. Indeed, the agency noted that “of the 404 entities that owned part of at least one affected [electricity generating unit] under this rule, 178 also owned [renewable energy]” – and these tended to be the largest power companies.
Take, for instance, American Electric Power (AEP), one of the largest utilities in the U.S. In 2016, the company says, it will get 51 percent of its generation from coal, 28 percent from natural gas, and 11 percent from renewables — including hydro, wind, and solar. That’s a significant change even over this year, when AEP says it is at 61 percent coal, 23 percent natural gas, and 8 percent renewables.
Nicholas Akins, the CEO of AEP, does criticize some aspects of the renewables boom, though — he thinks large solar photovoltaic plants are a better investment than rooftop solar installations. Photovoltaics on a utility scale plant, he said, “are half the cost of rooftop solar. So they take much less in terms of government incentives. If you’re going to address the Clean Power Plan… you’re going to get a much bigger impact with much less incentives and more carbon impact — a win win win.”
Earlier, Akins said he was worried that if EPA seeks “onerous targets at the beginning, it will drive inefficient solutions,” citing rooftop solar as an example. “We know that utility solar is half as expensive with less government incentives. So this is an area where a utility can step in and make significant progress.”
In the end, it’s important to realize that even with EPA’s more optimistic projections, there is a strong case to be made that renewables still aren’t growing fast enough to reduce our economy’s dependence on fossil fuels — or to adequately slow climate change. In 2030, the final Clean Power Plan notes, “coal and natural gas will remain the two leading sources of electricity generation in the U.S., with coal providing about 27 percent of the projected generation and natural gas providing about 33 percent of the projected generation.”
Steven Mufson contributed to this report.
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