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Analysis: US DOE report backs 35% penetration

UNITED STATES: A new US Department of Energy (DOE) report finds that an ambitious penetration of wind in America -- 35% by 2050 -- is "plausible", in terms of grid reliability and cost, as well as the industry's ability to scale up.

Alta Wind Energy Centre cluster — the largest project in the US
Alta Wind Energy Centre cluster — the largest project in the US

Such a scenario, which would also assume that wind contributes 10% of electricity by 2020 and 20% by 2030, is "ambitious and credible", said the much-awaited Wind Vision report. Wind currently provides 4.5%.

If wind installations maintain such as aggressive path, the cost of generating new wind power will be below the national average for both new and existing fossil plants "within the next decade", even with the expiration of the production tax credit (PTC) and current fossil fuel subsidies, said the DOE.

But the 290-page report concedes that wind's long-term future in the US is highly dependent on continued policy support, aggressive wind cost reductions, high fossil-fuel costs — including natural gas — and load growth, plus more transmission from wind-heavy areas. It notes that through to 2040, the DOE's Energy Information Administration projects flat electricity load growth.

The report, unveiled in mid-March, analyses the implications of high wind penetration, and compares this to less optimistic outlooks. Importantly, the so-called study scenario — of 10% by 2020, 20% by 2030, and 35% by 2050 — is not a projection or goal, despite often being described that way.

Assuming such a scenario, the US would have 113GW of installed wind capacity by 2020, 224GW by 2030, and 404GW by 2050 — up from almost 66GW at the end of 2014. Offshore would be 3GW by 2020, 22GW by 2030 and 86GW by 2050. The report was completed before January, when prospects withered for the 468MW Cape Wind offshore project.

Electricity costs may increase by 1% by 2030, but consumers would save 2% by 2050. The US could save $280 billion in natural gas costs by 2050, equivalent to a levelised consumer benefit of $0.023/kWh of wind. For context, the PTC — lambasted by wind critics as too pricey — currently costs $0.023/kWh.

Multiple benefits

Wind would employ more than 600,000 people in manufacturing, installation, maintenance and support services in 2050, with most turbine components made in the US.

About $400 billion would be avoided in global damage from greenhouse gases (GHGs), with 12.3 gigatonnes of avoided GHG emissions through 2050, equivalent to a levelised global benefit of $0.032/kWh of wind. By 2050, 260 billion gallons of water would be saved that would otherwise have been used by the electric sector.

Onshore wind's levelised cost of electricity (LCOE), the per-kilowatt-hour cost of building and operating a generating plant over its lifetime, is assumed to drop by an aggressive 24% by 2020, 33% by 2030, and 37% by 2050, compared with 2013's LCOE. Offshore's LCOE would drop by an unlikely 22% by 2020, 43% by 2030 and 51% by 2050. Bloomberg New Energy Finance (BNEF) foresees a 20% drop by 2020 in offshore wind's LCOE — but only in Europe.

The study scenario assumes no disruptive technological breakthroughs, but it does assume continuing cost improvements, including rotor scale-up, taller towers, overall plant efficiency improvements because of advanced controls, and improved plant designs because of a better understanding of atmospheric physics.

Amy Grace, head of wind at BNEF, questions the demand needed for the study scenario. "It's all theoretical," she said of the high penetration. "It's not a likely scenario, though it is within the realm of possibility." For such a high penetration, she said, a short-term change in the electricity market structure would be needed to incentivise idle or back-up capacity for when wind and solar are not available.

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