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Tax Breaks, Falling Costs Are Boosting Wind And Solar

Dec 29, 2015
Originally published on January 3, 2016 11:38 am

Right before the holidays, Congress approved tax credits for clean energy. It was just a tiny part of a $1.8 trillion spending bill, but solar and wind power companies say it's a Christmas present that will catapult their industry forward. Analysts are predicting a big boost in wind and solar projects over the next few years.

Thanks to fracking, solar and wind power now have to compete with supercheap natural gas. So more than ever, if you run a solar or wind farm you want to squeeze every bit of power and efficiency you can out of it. And you can see that at SunEdison's national control center in Boston.

Megan Rodgers is working at a bank of big wall-size digital displays. She is tracking the solar arrays and wind farms that the company builds and operates in Texas, Hawaii, Maine and 20 other states. Rodgers is on the phone with technicians out in a field of spinning wind turbines in Utah. They're doing some upgrades.

But Rodgers notices that some of the turbines have gone dark on her display and may have stopped spinning. "There's a whole string of them that are out," she says. Within minutes she has sorted out the problem.

'A Really Big Deal'

Wind turbines have gotten taller in recent years, with 200-foot-long spinning blades helping kick out more electricity. The generators have been getting better too. Altogether, the solar and wind farms SunEdison operates power the equivalent of about 1 million homes.

Still, today wind power makes up just 5 percent of total U.S. power generation, solar even less. But SunEdison General Manager Matt Kearns says the tax credits Congress passed will help change that.

"This is a really big deal," he says. "I mean it is probably the biggest thing that's happened to the renewable energy business over the last decade or so."

Kearns says that's because tax credits are still crucial to securing financing for big solar and wind installations. And in recent years Congress created too much uncertainty, he says. But now, Congress has extended the tax credits for five years.

That gives investors much more certainty. Kearns says he is already in conversations with industrial clients about new projects as a result. "They are eager to move, so this is a really important moment for the industry," he says.

Clean Energy Cost Plummets

It's an important moment for the industry for another reason, too: cost. "What we've seen that's so interesting is the very remarkable decline in the costs of utility-scale wind and utility-scale solar," says Jonathan Mir, head of power and utility research for Lazard, a big financial firm.

Mir says in 2009 the cost of wind power in North America on an unsubsidized basis was $135 per megawatt-hour. Today, he says, "the best-in-class unsubsidized wind can be built at prices of $30, so you've seen cost come down by 60-70 percent in the last five to seven years on utility-scale wind."

Solar has fallen in price even more sharply. And Mir says in just the past two years there's been a big shift in the industry. He says utilities now want to add more wind because that power can be cheaper than even upgrading an old coal plant to meet pollution standards. "That's an amazing, amazing inflection point," he says.

Ron Binz, an energy consultant, says the Department of Energy finds that wind power alone could double in the U.S. in the next five years. And it could reach 20 percent of total U.S. power generation in 15 years.

"Renewables have reached a point where there's no going backwards," he says. "They are becoming cheaper and cheaper and will eventually become the cheapest resource that we can use."

But Binz says renewables still face a key problem. They're intermittent: The sun goes down and the wind stops blowing. So one big area of research is energy storage to help get around that problem. In the meantime, Binz says, solar and wind will be ever-larger puzzle pieces to complement natural gas power plants and other sources of electricity generation in the U.S.

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The new year should bring more renewable energy projects to the U.S. Just before the holidays, Congress approved tax credits for clean energy. They haven't gotten a lot of attention, but solar and wind power companies liken them to Christmas presents that will catapult the industry forward. NPR's Chris Arnold reports.

CHRIS ARNOLD, BYLINE: Thanks to fracking, solar and wind power now have to compete with super-cheap natural gas. So more than ever, if you run a wind farm, you want to squeeze every bit of power and efficiency you can out of it. And you can see that at SunEdison's national control center in Boston.

UNIDENTIFIED MAN: We're done with the breaker installation.

MEGAN RODGERS: Ten tack one at Milford two. You guys have completed the breaker installation and you're ready to return to service?

UNIDENTIFIED MAN: Ten-one.

RODGERS: Ten tack one...

ARNOLD: Megan Rodgers is working at a bank of big wall-sized digital displays. She's tracking the solar arrays and wind farms that the company builds and operates in Texas, Hawaii, Maine and 20 other states. Right now she's talking to some technicians who are out in a field of wind turbines in Utah. Some of the turbines there have gone dark on her display and they might've stopped spinning.

RODGERS: Actually, there's a whole string of them that are out right now - 10-one, 10-two, 10-four, five, six and eight. And I was thinking it was due to the work that you guys started at 10-five earlier.

UNIDENTIFIED MAN: Oh, you know what? Yes, I did...

ARNOLD: Wind turbines have gotten taller in recent years, with 200-foot-long blades that help kick out more electricity. Altogether, the solar and wind farms Rodgers is watching here power the equivalent of about 1 million homes. Still, so far, wind power only makes up about 5 percent of total U.S. power generation. Solar is even less. But SunEdison general manager Matt Kearns says these tax credits that Congress just passed will help to change that.

MATT KEARNS: This is a really big deal. I mean, I think it is probably the biggest thing that's happened to the renewable energy business certainly since I've been involved - over the last decade or so.

ARNOLD: Kearns says that's because tax credits are still crucial to get financing for big solar and wind installations. And in recent years, he says Congress created too much uncertainty around the tax credits. But now Congress has extended them for five full years. That's created a lot more certainty. And already, Kearns says he's in conversations with industrial clients about new projects as a result.

KEARNS: They are eager to move. So this is a really important moment for the industry.

ARNOLD: It's an important moment in another way too. Jonathan Mir heads up power and utility research for Lazard. It's a big financial firm.

JONATHAN MIR: What we've seen that's so interesting is the very remarkable decline in the costs of utility-scale wind and utility-scale solar.

ARNOLD: Mir says if you go back to 2009, the cost of wind power in North America on an unsubsidized basis was $135 a unit. A hundred and thirty-five dollars. Compare that to today...

MIR: The best in class, unsubsidized wind can be built at prices of $30. So you've seen costs come down by 60 percent, 70 percent on utility-scale wind.

ARNOLD: Solar has fallen in price even more sharply. So Mir says, in just the past two years, we've come to a new place. He says some power utilities now want to add more, say, wind power because that power can be cheaper than even upgrading an old coal plant to meet pollution standards.

MIR: That's an amazing, amazing inflection point.

ARNOLD: Ron Binz is an energy consultant. He says the energy department finds that wind power alone could double in the U.S. in the next five years. And it reached 20 percent of total U.S. power generation in 15 years.

RON BINZ: Renewables have reached a point where there's no going backwards. They are becoming cheaper and cheaper and will eventually become the cheapest resource that we can use.

ARNOLD: But Binz says there's still the problem with renewables that they're intermittent - the sun goes down and the wind stops blowing - so one big area of research going forward is energy storage to help get around that problem. Chris Arnold, NPR News, Boston. Transcript provided by NPR, Copyright NPR.