20140957 Ver 2_Attachment 9_Greenlink Report_20170818

Attachment 9

m
CLLANZ-,NFRGN'd'iAS APRIVED
Tapping Regional Resources to Avoid Locking In
Higher Cost Natural Gas Alternatives in the Southeast
greenlink

greenlink
AUTHOR:
Matt Cox, PhD, The Greenlink Group
Prepared for the Southern Environmental Law Center
For more information, contact:
Matt Cox
The Greenlink Group
[e-mail]
Gudrun Thompson
Southern Environmental Law Center
[e-mail]
April 2017

greenlink
INTRODUCTION
The cost of renewable energy has fallen precipitously over the past ten years, and this trend is
expected to continue. In contrast, most other mature electricity generation technologies are
expected to see minimal cost declines. Meanwhile, energy efficiency remains the lowest -cost
electricity resource. Major new utility investments in fossil fuels—including natural gas
pipelines, power plants and other infrastructure—risk locking the Southeast in to a multi-
decadal pathway of reduced economic flexibility, hampering the region's ability to realize the
benefits of clean, cost-effective, fuel -free renewable energy and energy efficiency resources.
Recent Trends in Renewable Energy Costs
Solar
The cost of electricity from solar photovoltaic (PV) generating technologies has declined
dramatically in recent decades. The rate of decline has been relatively constant, averaging
about 10% per year, since 1980.1 In the United States, several industry and government
estimates show even faster cost declines, exceeding 80% in the past seven years .2 3
LCOE
$/MWh
$450
cul'
400 $394�I"'Caj
ct��
350 $342 S�vrtr_�.
e7t
f r e17
300 $323
e
$270 $261 Cruse:.
250 $201
$226 $204 $204
200'f $193 $193
$166 $186 — �I $177 `.
150 $149 P , + —
$148 $149 $149
$104 $126
144
$101
$86 $109 $88
$91 $70
$72 $61
50 $58
$49
4
2009 2010 2011 2012 2013 2014 2015 2016
LCOL
Version3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0
C—tAh- C—tium, — — Roottop C&I So1- Rooftop Cha Solar
L:t Ltr-Scale Solar Et.W-Scale Solan LCOE 11— LCOS Range'"
LCOS 11— LCOS Range"%
Figure 1. Declines in the Cost of Solar Power
1 Farmer, J Doyne, and Francois Lafond. 2016. "How Predictable is Technological Progress?". Research Policy 45 (3),
pp 647-665.
2 Lazard. 2016. Lazard's Levelized Cost of Energy Analysis, version 10.0. Retrieved from:
https://www.lazard. com/perspective/levelized-cost-of-energy-analysis-100/
3 United States Department of Energy. 2017. "SunShot Initiative Goals." Retrieved from:
https://energy.govleerelsunshotlsunshot-initiative-goals
4 Figure taken from (2).
1

greenlink
On average, the levelized costs for utility -scale PV generation are now very competitive with
other energy technologies. For the Southeast as a whole, utility -scale solar costs remain
roughly 15% lower than the national averages In North Carolina, utility -scale solar installed
costs are about 5% below the national average, with recent median price declines similar to the
rest of the country .6 While North Carolina has approximately 2400 MW of solar, Virginia has
only installed 136 MW to date.' The cost paid by the utilities for this electricity varies, but
averages near $0.07/kWh in North Carolina and $0.048 in Virginia.$ Distributed solar
generation is also seeing increased adoption by residential and commercial users in these
states. According to the Energy Information Administration, distributed generation from solar in
North Carolina increased by 83% between 2015 and 2016; Virginia observed a 50% increase
over the same time period.9 Costs for these distributed solar have been declining at 14-15% per
year since 2009, and the Carolinas and Virginia experience average installed costs that are 16-
17% below the national average.10,11
Wind power has also seen rapid cost declines recently. Nationally, capacity -weighted prices
have dropped 27% since 2009.12 Despite this, utilities in North Carolina and Virginia have not
incorporated wind power into their capacity expansion plans. Recent estimates of current
economic generation potential for wind power in these states range from 600,000 to 3,200,000
MWh with current economics and the technical resource available in each state. 13 The most
recent data shows that, at most, only 1% of the existing economic potential has been realized .14
Energy Storage
Energy storage technology is also experiencing rapid cost declines, exceeding 15% per year
recently. 15 While not cost-effective in all circumstances, the technology is advancing quickly and
s Bolinger, Mark and Joachim Seel. 2016. "Utility -Scale Solar 2015: An Empirical Analysis of Project Cost,
Performance and Pricing Trends in the United States." Retrieved from: https://emp.lbl.gov/sites/default/files/Ibnl-
1006037 report.pdf
6 Barbose, Galin and Naim Darghouth. 2016. "Tracking the Sun IX: The Installed Price of Residential and Non -
Residential Photovoltaic Systems in the United States. Retrieved from:
https://emp.lbl.gov/sites/default/files/tracking the sun ix report.pdf
Energy Information Administration. 2017. "Electric Power Monthly: February."
8 Federal Energy Regulatory Commission. 2016. "FERC Form 1."
9 See (7).
10 Chung, et al. 2015. "US Photovoltaic Prices and Cost Breakdowns: Q1 2015 Benchmarking for Residential,
Commercial, and Utility -Scale Systems." National Renewable Energy Laboratory. Retrieved from:
http://www.nrel.gov/docs/fyl5osti/64746.pdf
11 EnergySage. 2017. "How Much Do Solar Panels Cost in the US?" Retrieved from:
http://news.energysage.com/how-much-does-the-average-solar-panel-installation-cost-in-the-u-s/
12 Wiser, Ryan and Mark Bolinger. 2016. "2015 Wind Technologies Market Report." Lawrence Berkeley National
Laboratory. Retrieved from: https://emp.lbi.gov/sites/default/files/2015-windtechreport.final .pdf
13 Brown, et al. 2016. "Estimating Renewable Energy Economic Potential in the United States: Methodology and
Initial Results." National Renewable Energy Laboratory.
14 Calculation based on comparing the estimates from (10) and (14).
is Wilkinson, Sam. 2015. "Grid -Connected Energy Storage Report." IHS Technology.
2

greenlink
is likely to have a significant commercial presence within the next ten years, at both the utility -
and customer -scale.
Future Projections of Renewable Energy Costs
While renewable energy technologies are being deployed at both customer- and utility -scale
today, most experts expect continued declines in the cost of these technologies. For solar,
annual projected declines in installed cost range from 5 to 15%.16' 11, 18 Wind costs are projected
to decline by 1% to 2.5% per year in the near term. 19,20 Similarly, energy storage costs,
particularly in the lithium ion category, are expected to drop 5% to 10% per year in the near
term.21, 22 Other conventional power generating resources have shown flat to increasing
prices .23 Building additional conventional power generating resources, along with the
infrastructure necessary for fuel supply and waste disposal, will cease to be economic as these
resources lose the ability to compete on a marginal price basis.
Lo
N
O
O
1980 1986 1992 1998 2004 2010 2016 2022 2028
Figure 2: Projected Future Costs of Solar Module Prices24
16 See (1).
17 US Energy Information Administration. 2017. "Annual Energy Outlook."
18 Greentech Media Research. 2016. "U.S. Solar PV Price Brief H1 2016: System Pricing, Breakdowns and
Forecasts."
19 See (13).
20 Wiser, Ryan, et al. 2016. "Forecasting Wind Energy Costs and Cost Drivers: The Views of the World's Leading
Experts." Lawrence Berkeley National Laboratory.
21 Greentech Media Research. 2017. "U.S. Energy Storage Monitor."
22 Hamilton, Katherine. 2015. "Energy Storage: State of the Industry." Presented at the Energy Information
Administration Energy Conference 2015.
23 US Energy Information Administration. 2016. "Capital Cost Estimates for Utility Scale Electricity Generating
Plants."
24 Figure taken from (1).
3

greenlink
Energy Efficiency: An Abundant, Low-cost Resource
While the cost of renewable energy generation technologies has dropped, energy efficiency
remains the most cost-effective resource available.
Recent estimates of energy efficiency's potential to meet demand have found abundant energy
savings potential in the Southeast. The National Renewable Energy Laboratory recently
estimated cost-effective energy savings of 35-40% in Virginia and the Carolinas in the single-
family residential sector alone .2S In the Carolinas, Duke Energy estimates an economic potential
for energy efficiency to meet 17.5% of electricity demand .26 A regional estimate based on the
methodology of the American Council for an Energy Efficient Economy shows the potential to
cost-effectively reduce electricity demand across all sectors by approximately 4% per year .27
Electric utilities in the Carolinas and Virginia are not taking advantage of the potential for cost-
effective energy efficiency. Duke plans to pursue only half of this potential under current
plan S.28 Thus, while the studies mentioned above and others show a highly cost-effective
energy efficiency resource for North and South Carolina, typically in double -digits, current
actions and strategies will not deliver these energy and cost savings to customers .29, 30 Virginia
fares even worse, as utility savings from energy efficiency in the state are roughly 1/10th that of
North Carolina, while the estimates of cost-effective potential are similar .31 32
Levelized Cost of Electricity: Wind, Solar, Efficiency & Natural Gas
A review of the levelized cost of electricity from these different resources shows that they are
all currently cost -competitive with natural gas combined -cycle power plants, and all more
economic than natural gas combustion turbines (Table 1). In the case of wind and energy
efficiency, the data show that these resources could be deployed more cost-effectively than
any form of new natural gas power plants. Major new investments in capital -intensive natural
gas infrastructure, rather than energy efficiency and renewable energy resources, would inhibit
the deployment of the most cost-effective options to meet electricity demand.
25 Wilson, Eric, et al. 2017. "Electric End -Use Energy Efficiency Potential in the U.S. Single -Family Housing Stock."
National Renewable Energy Laboratory.
26 Duke Energy. 2016. "2016 Integrated Resource Plans: Duke Energy Carolinas and Duke Energy Progress."
Presentation.
27 Nadel, Steven. 2016. "Cutting Energy Use and Carbon Emissions in Half." American Council for an Energy Efficient
Economy. Calculation based on (17) and (27).
28 See (26) and (27).
29 Jacobson, Mark, et al. 2015. "100% clean and renewable wind, water, and sunlight (WWS) all -sector energy
roadmaps for the 50 United States." Energy and Environmental Science 8, pp 2093
30 Brown, Marilyn, Alexander Smith, and Gyungwon Kim. 2016. "The Clean Power Plan and Beyond." Retrieved
from: https://cepl.gatech.edu/sites/default/files/attachments/NEMS CPP Paper 06-24-2016.pdf
31 US Energy Information Administration. 2016. "Form 861: Electric power sales, revenue, and energy efficiency
(Revised)."
32 See (25), (26), (30), and (31). Some estimates are regional, combining Virginia and the Carolinas.
4

greenlink
Table 1. Levelized Cost of Electricity from Multiple Resources in Virginia, North Carolina, and
South Carolina 33, 34
•
Utility -Scale Solar
49-74.6
49-65.7
49-68.3
Wind
22-34
22-34
22-34
Efficiency
37
15
15
NGCC
48-78
48-78
48-78
NGCT 92.6-165 92.6-165 92.6-165
33 US Energy Information. 2016. "Levelized Cost and Levelized Avoided Cost of New Generation Resources in the
Annual Energy Outlook 2016."
34 Results compiled from (2), calculated from (23) with regional adjustments, calculated from (31) and from (33).
5