The EIA’s Annual Energy Outlook 2016: Looks Like a Bright Future for Renewables

Posted by: EmmamHowe // Marketing/Green Policy Development

Every July, the Energy Information Administration (EIA) holds an annual conference to discuss current energy technology, market, and policy issues, and this year, they presented results from their Annual Energy Outlook (AEO) 2016 report. Excitingly, one of the headlines this year was the EIA’s new projections for renewable energy, which they believe will surpass nuclear power by 2020 and coal by 2028, becoming the second largest source of U.S. electricity generation, second to natural gas.

Below are six key takeaways from the conference, explaining why the the EIA believes there will be such a substantial increase in renewable energy this year:

1. Federal tax credits/incentives for Renewables are extended by the EPA’s Clean Power Plan:
The EIA’s reference case includes the recent five-year extension of the federal production and investment tax credits for wind and solar that were passed by Congress in December 2015, as well as the implementation of EPA’s Clean Power Plan (CPP). The federal tax credits, state renewable electricity standards (RESs), and continued cost reductions for wind and solar are projected to drive significant growth in renewables through 2021. During this time, the EIA actually believes natural gas generation will take a slight dip as wind and solar are become cost-effective due to the increase in federal tax credits. Once the CPP targets kick in 2022, the EIA speculates that both renewables and natural gas will grow to become the two most cost-effective ways for states to implement the plan and “go green.”

2. Support and use of wind and solar technologies is growing substantially:
The report projects that the share of electricity generated from renewable sources (including wind, solar, geothermal, biomass, and hydropower) is expected to grow from the 13 percent it was in 2015 to over 24 percent in 2030, and 27 percent in 2040, with almost all of the growth coming from wind and solar PV. The EIA speculates this because cost reductions beyond 60-70 percent (based on 2009 levels) are projected for these technologies.

3. Renewable generation will increase in EVERY US region by 2030:
The biggest increases are expected to occur in the West and the Plains, which already have plentiful, low cost wind, solar, and geothermal. The Southeast will also see a big increase in solar energy as costs continue to fall, whereas the Northeast and Mid-Atlantic are expected to see a smaller increase in renewables but a larger increase in natural gas.

4. Increasing renewable energy IS affordable:
A recent analysis by UCS found that energy efficiency could make a much larger contribution to state compliance with the Clean Power Plan that would give consumers an overall net savings of about $30.5 billion between 2016 and 2030.

5. Renewables ARE competitive even though we’re seeing low natural gas prices:
Though the EIA’s natural gas price projection is lower in 2016 than it was in 2015, there are large still amounts of wind and solar that will be competitive regardless, due to of estimated future cost reductions and the CPP’s extension of the federal tax credits.

6. The EIA is now using more realistic cost assumptions for renewable energy:
In the past, the EIA’s projections overestimated the cost of renewable energy sources like wind and solar, often lagging years behind the actual technological innovation and cost reductions occurring in the present. Fortunately, their projections for 2016 seem to be more accurate. This year, the EIA has lowered their costs for wind and solar, aligning them more closely with cost values from recent data and projects, as documented by the Department of Energy’s national lab and national wind and solar trade associations.

Overall the EIA’s AEO 2016 outlook looks quite promising for the future of clean technologies, with the total number of renewables used in the electric power sector expected to increase by 11.2% in 2016 and by 3.9% in 2017. It is also exciting that the topic of this year’s conference highlighted the benefits of renewable energy sources, and the likelihood of their abundance in the future. What’s the next step for America’s clean energy future? To get these clean, green technologies to surpass our natural gas consumption, moving America closer to becoming a more sustainable place to live.

For more information see:
http://energy.gov/sites/prod/files/2015/08/f25/2014-Wind-Technologies-Market-Report-8.7.pdf
http://www.seia.org/research-resources/us-solar-market-insight
http://blog.ucsusa.org/steve-clemmer/renewable-energy-to-surpass-coal-and-nuclear-by-2030-eia-annual-energy-outlook-2016?utm_source=ACORE%20Mailing%20List&utm_campaign=6ab974901f-ECG_Daily_Note_7_12_16&utm_medium=email&utm_term=0_6ccfb2f247-6ab974901f-59348041&goal=0_6ccfb2f247-6ab974901f-59348041&mc_cid=6ab974901f&mc_eid=e000aa499f
http://www.eia.gov/renewable/
http://www.eia.gov/forecasts/steo/report/renew_co2.cfm