Record Wind and Solar Capacity to Come Online in 2020, says EIA
- Jan 14, 2020 5:40 pm GMT
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2020 will be a sunny and windy year for renewable energy advocates.
According to the latest inventory of electricity generators from the U.S. Energy Information Administration (EIA), solar energy capacity will jump to account for 32% of overall additions in 2020 from 18% last year. With 13.5 GW of solar capacity being added to the grid, the year also heralds a new record in capacity additions. The previous record for solar was 8 GW in 2012. Texas and California will account for 37% of new additions in solar. Florida, a laggard in this form of renewable energy despite its plentiful sunlight, is catching up and will account for 11% of new additions. On an overall basis, the federal agency expects 42 GW of power to come online, almost double of last year’s 23.7 GW additions.
Solar PV’s share of new additions is surpassed by that of wind power, which will account for 44% of new capacity. While the figure is a 2% decline from the previous year, it still represents 18.5 GW of new wind capacity in 2020. That is a new record, which surpasses the 13.2 GW figure set in 2012. Most of the capacity additions in wind will occur at the end of the year, in November and December, as the Production Tax Credit (PTC) for wind expires, according to the EIA.
Planned natural gas capacity expected to come online this year is 9.3 GW, a modest increase from last year’s figure of 7.5 GW. That figure also means that the share of natural gas in new capacity additions is down to 22% from 34% of new capacity last year.
Meanwhile, fossil fuels and nuclear will continue to drive the other end of the spectrum, namely retirements. Eleven GW of capacity is scheduled to be retired in 2020 and coal, with a share of 51%, accounts for a majority of that capacity. More than 10 GW of coal capacity was retired last year, according to estimates. Natural gas and nuclear account for 33% and 14% of overall retirements scheduled in power capacity for 2019.
A Turnaround from 2018
The latest inventory report represents a turnaround of sorts from two years ago. 2018 was the first year since 2013 that renewables did not make up a majority of added capacity. That was also the year that natural gas added 21 GW to the grid.
But the fuel has fallen out of favor in recent times.
Just yesterday, EQT Corp., America’s biggest natural gas producer, announced impairment of $1.8 billion of assets during the fourth quarter. The company cited low natural gas prices and a new development plan to cut down on its debt in the face of investor demand for dividend growth. EQT Corp. is not the only natural gas company tightening its belt. Natural Gas Intelligence reported last year that nine publicly-traded Appalachian E&P plan to cut capital expenditures by 19% in 2020 as compared to the previous years and tamp down their production growth by only 3.6%.
“As such, we estimate their total production growth in Appalachia will be 3-4% in 2020, a far cry from the double digit percentage increases that have become the norm in the area,” Patrick Rau, director of strategy and research at the publication, said. Blackrock, the world’s biggest asset manager with investments in several oil & gas companies, has also made climate change a priority and its stance is expected to apply pressure on fossil fuel producers to curtail their growth plans.
Of course, there is also the regulatory overhang that has resulted in a surge of new capacity for renewable energy. 2020 onwards will be a time of reckoning for renewable energy as credits expire and fossil fuels take a backseat in power generation. New technologies, such as energy storage and advanced nuclear reactors, may also aid in more renewable energy coming online. Already, Congress is making efforts to subsidize their introduction into electric grids. For example, Republican Tom Reed from New York has proposed a bill that enables subsidies for power producers who introduce new technologies into the grid.