To Capitalize on Falling Costs of Wind and Solar, Lift Institutional Barriers

Synapse released a report today that identifies key barriers to the continued rapid expansion of wind and solar energy. Today's power systems evolved for fossil fuels rather than renewables, and as a result, present obstacles to capitalizing on the falling costs of wind and solar energy.

The report, Technical and Institutional Barriers to the Expansion of Wind and Solar Energy, offers solutions to overcome these barriers—some of which are already in progress. For example, across the country, the organizations that coordinate regional electricity supply and demand, called balancing authorities, are facilitating broader integration of renewables by cooperating and consolidating to increase dispatch flexibility.

Similarly, regulators can make relatively low-cost, simple changes to electricity markets and regulations over the next five years to smooth the transition. The report offers solutions to ease the administrative burdens that can stall development, to stabilize renewable policy uncertainty that hinders development planning, and to ensure electricity rates do not by design discourage distributed generation.

The report also addresses supposed barriers such as threats to system stability from the addition of intermittent renewables that—it turns out—will not be an issue for many years. Over the last 10 years, utility-scale wind and solar capacity has jumped from 9 GW to 75 GW. Grid operators are equipped to accommodate ramping needs for even higher levels of integration in the near term, according to the report. Integration studies have shown that hundreds of megawatts of renewable capacity can be integrated with modest improvements, such as balancing area coordination and transmission reinforcements.

However, the barriers identified in the report have palpable effects on the continued rapid expansion of renewables. For instance, uncertainty over the future of the federal production tax credit led to a boom-and-bust cycle in which 13 GW of renewable capacity was installed in 2012, but only 1 GW was installed in 2013 after the credit expired. More certainty over the future of these programs would give installers and manufacturers greater confidence to invest in new projects.

“Although the installation costs for renewable technologies have fallen rapidly, the availability of federal tax incentives has been critical to getting these technologies off the ground,” said Patrick Luckow, the lead author of the report. “These tax credits will remain important for the next several years to incentivize developers to push through the barriers discussed in the report.”

The incentive to remove these barriers has never been greater: Coal capacity decreased to below 300 GW for the first time since 1988 in March of this year, and an additional 40 GW of retirements are expected by 2017. Combined with dramatic cost reductions for renewable technologies, this creates an unprecedented opportunity for the expansion of wind and solar to replace the energy of retiring fossil units. The small but critical measures identified in the Synapse report are necessary to ensure the expansion happens efficiently.