As production surged globally, 2015 was the year of cheap oil – Brent crude is forecasted to average $53 per barrel on the year, down some 46 percent from 2014. The market slump, and ensuing damage, has largely overshadowed a record year for solar and a strong rebound for wind. In that regard, 2016 is unlikely to bring significant changes – oil remains the commodity. Still, signs point to a changing of the guard sooner rather than later.
The ball got rolling in Paris in early December, where 196 countries agreed to the most wide-reaching and ambitious climate accord to date. Uncertainty remains over the United States’ ultimate commitment – and over the route each country will take for that matter – but the nation took another step in the right direction on December 16, when Congress approved a year-end spending and tax deal. Ignoring the bills more contentious provisions, of which there are many, the deal grants extensions to both the production tax credit (PTC) for wind and the investment tax credit (ITC) for solar. The PTC expired last year and the ITC was set to expire at the end of 2016.
Specifically, the 2.3-cent-per-kilowatt-hour PTC will return at full strength through 2016, before tapering in value 20 percent each year until its expiration in 2020. The ITC will remain at 30 percent for commercial and residential systems through 2019; it drops to 26 percent and 22 percent in 2020 and 2021 respectively; and projects constructed before 2024 will receive a 10 percent rate. Related: Saudi Arabia Cuts Subsidies As Budget Deficit Soars
Since their inception, and to the ire of many, the ITC and PTC have afforded the solar and wind industries massive growth opportunities. Wind and solar currently account for nearly 5 percent of U.S. electricity generation – up from 0.5 percent in 2005. Individually, net generation from solar and wind has grown an average of 39 percent and 32 percent annually since 2003, respectively. Prices have fallen at a similarly steady, and rapid rate during this period, but waffling policy decisions have prompted unfavorable boom-bust cycles. To this point – and for a largely forward-looking industry – the most recent tax credit extensions exceed past iterations by enabling a degree of certainty previously unseen. The results are expected to be striking.
2016 was always going to be a big year for solar, though, to be sure, the reduced pressure to complete projects in 2016 dampens expectations, if only slightly. Early projections suggest new solar capacity installations will total between 10 and 15 GW. Put another way, cumulative U.S. photovoltaic (PV) installations are set to nearly double between Q4 2015 and Q4 2016. Cost reduction was the name of the game pre-extension, and ready-to-deploy innovations could cut utility system costs by 40 percent in the next year. If 2016 isn’t the year, then the following four will certainly be contenders.
Following the ITC extension, $40 billion in incremental investment in U.S. solar is expected to pour in between 2016 and 2020. New installations in that same period – mostly residential and utility – will total 72 GW, an increase of 54 percent over the non-extension scenario. By 2020, the U.S. solar market is expected to draw an average of $30 billion in investment annually, and support additions of at least 20 GW per year. Further, solar employment will nearly double to 2020, as the U.S. becomes the second most attractive market for PV manufacturing. Related: $10 Trillion Investment Needed To Avoid Massive Oil Price Spike Says OPEC
The same holds true for wind power, which – minus subsidies – is already the cheapest electricity to produce in at least two G7 economies. By the time the tax credits expire, it will be the cheapest in many U.S. states too. In 2016 new installations will total 9.4 GW, followed by 7.7 GW in 2017 and 11.6 GW in 2018. Looking farther ahead, cumulative capacity will reach over 100 GW by 2020, well ahead of schedule for the Department of Energy’s 20 percent wind by 2030 milestone.
Together, wind and solar could make up 10 percent of net electricity generation by 2020 – wind at 6.5 percent and solar at 3.5 percent. Additionally, new wind and solar added to the US grid as a result of the ITC and PTC extensions could displace over 80 million tons of CO2 annually by 2020, equivalent to the average emissions of nearly 23 coal-fired power plants.
The extensions provided an immediate boost to wind and solar companies, who have had a mostly down Q3 and Q4. Shares in Canadian Solar, First Solar, Solar City, SunEdison, and SunPower jumped a combined average of 18 percent on the news. Vestas Wind Systems and the newly floated Avangrid have seen a meaningful surge as well. Related: China's $1 Trillion Nuclear Plan
Globally, China will continue to lead the way in new installations. The country plans to add 20 GW of new wind and 15 GW of new solar PV in 2016. Overall, global solar and wind installations are expected to grow some 12 percent and 4 percent respectively, over 2015. Crucially, sustained low oil and gas prices pose little threat to renewables continued, and rapid growth.
The renewables revolution won’t happen overnight, or even in one, single year. Still, with the foundation now laid – and the bridge to the Clean Power Plan set – 2016 will be a year of marked growth, rather than stagnation.
By Colin Chilcoat of Oilprice.com
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It have been confirmed by top Russians scientists
And the top institute in China is all over it..
And what is the Article about.. Solar and wind...??
From the last article I read on the subject, all the zillions of solar panels already installed in the U.S. equals about 1% of our energy needs. Throw in wind power and you're up to about 2.6%.
"Is 2016 The Year Of Wind And Solar?"
So, I'd guess "No" at this point.
Any other questions?