Much has been made of President Trump’s decision to withdraw the United States from the Paris Climate Accords. However, a forecast by Morgan Stanley says it won’t matter because the market is moving rapidly and inexorably to less expensive renewable wind and solar energy.
“Numerous key markets recently reached an inflection point where renewables have become the cheapest form of new power generation,” the Morgan Stanley forecast says. A 50 percent drop in the cost of solar panels combined with efficiencies in wind turbine blades could enable the United States to exceed its “Paris commitment of a 26-28 percent reduction in 2005-level carbon emissions by 2025.”
Whether or not you believe in human-caused climate change, it is hard to argue with ineluctable market forces. “By our forecasts, in most cases favorable renewables economics rather than government policy will be the primary driver of changes to utilities’ carbon emissions levels,” Morgan Stanley says. Solar and wind power could be cheaper than their carbon-based counterparts in as little as three years.
The price drop in solar panels is the result of global oversupply and, according to US solar panel manufacturers, foreign dumping of low-priced panels. Wind turbine efficiencies involve using longer blades that can “increase power output exponentially.”
In addition to climate benefits, Morgan Stanley says lower-cost renewable energy sources can benefit electric utilities, consumers and investors.
“First, the ability to lower customer bills from utilizing low-cost renewables can improve utilities' regulatory environment and provide related investment opportunities in grid modernization initiatives,” the bank says. “Second, for utilities with large, competitive renewable development businesses, investment in renewable energy projects can generate attractive risk-adjusted returns.”
Oregon is seeing increasing interest in utility-scale solar projects, according to the Oregon Solar Energy Industries Association. The solar energy trade group says there already is 155 MW of utility-scale solar power installed in Oregon. The addition of new large-scale and rooftop solar installations could push solar power sources, OSEIA says, to 10 percent of Oregon’s overall energy mix within a decade.
That timeline could be affected by the failure of the 2017 Oregon legislature to extend the residential energy tax credit (RETC) that provides an incentive for rooftop solar installations. Lawmakers agreed to an extension for solar, but it didn’t survive the cuts required to achieve a balanced state budget. RETC funding could be resumed in the 2018 short legislative session, which could minimize any slowing of solar momentum in Oregon.