Solar is the renewable resource often associated with microgrids. Distributed wind has seemed too niche and scarce to play much of a role.
But don’t count distributed wind out yet. Its numbers may grow.
The amount of behind-the-meter distributed wind energy could reach 42 GW by 2020, according to a report from the federal Department of Energy’s National Renewable Energy Laboratory.
The report, “Assessing the Future of Distributed Wind: Opportunities for Behind-the-Meter Projects” concludes that the resource could play an important role in the nation’s electricity future.
“Notwithstanding some potential overlap with the multimegawatt-utility-focused wind power resource and the current exclusion of competition from other distributed generation resources, its resource is large, and there are conditions under which the economics for large quantities (tens of gigawatts) become viable over time,” said the report.
To make the potential a reality, the technology must acheive cost reductions and performance improvements. In addition, the industry needs to identify ways to encourage consumer adoption of wind power and develop new business models that provide for low-cost capital, support turnkey solutions and ensure efficiencies in the industry, said the report.
42 GW or more economically viable
To reach the 42 GW level by 2020, focus would have to be on sites that can generate a positive net present value, the report said. This estimate drops to 19 GW in 2030 and “settles” at 37 GW by 2050.
The estimates assume discontinuation of the production tax credit and investment tax credit. “These tax credit expirations drive the decline in observed potential between 2020 and 2030,” the report said.
The “reference” scenario assumes that by 2030 a project’s levelized cost of energy would be 52 percent lower than in 2014 for turbines 1 MW and smaller. For turbines 1 MW and larger, costs would be 33 percent lower by 2030. The figures are based on typical long-term interest rates and debt to cover 60 percent of project costs.
This scenario also assumes the retail electricity rate would track the Energy Information Adminsitration’s (EIA) Annual Energy Outlook 2016 Reference Case.
Under a more favorable scenario–with better technology, finance and retail electricity rate conditions, the economic viability predictions are better for residential, commercial and midsize turbines. “In this scenario, an estimated 48 GW of capacity could be economically viable in 2030, with more than 85 GW in 2050,” the report said.
Under these more favorable economic conditions, access to finance, siting policy, and competition from alternative distributed-generation sources are expected to have more significant effects on market potential.
“Although these estimates suggest conditions under which large quantities of distributed wind could become economically viable, there are significant uncertainties and anticipated regional variation in key analysis assumptions that may alter the economic landscape for behind-the-meter distributed wind,” the report said. The economic potential estimates depend on retail rates, net metering policies, financial incentives and financing costs. And these factors are likely to vary state-to-state, the report said.
Market potential: Up to 300 percent increase by 2030
In another section of the report that focuses on market potential, the “reference” scenario could lead to about 1.5 GW of deployed capacity in 2030 and 3.7 GW in 2050.
“Assuming behind-the-meter applications are approximately half of today’s installed distributed wind capacity (approximately 500 MW), this represents an approximately 300 percent increase in the market by 2030 and a nearly eight-fold increase (three doublings) in cumulative capacity by 2050,” the report said.
Under the “Combined High” scenario, the cumulative market is estimated at 3.9 GW in 2030 and nearly 20 GW in 2050.
More distributed wind energy than needed?
The “addressable resource potential”–the maximum amount of wind resources in the US that could be sited close to electricity demand–could be millions of systems and thousands of GW of power production capacity, said the report. This estimate doesn’t take into account potential alternative uses of the land by other power generation technologies, the report noted.
“In aggregate terms, the addressable resource potential for distributed wind exceeds the total U.S. electricity demand,” said the report.
Distributed wind systems that are less than 1,000 kW could provide up to 3 TW of capacity, and with existing wind turbine performance levels could produce 4,400 TWh of annual energy generation, said the report.
Total U.S. electricity demand in 2015 was about 3,700 TWh, according to EIA figures.
“Megawatt-scale turbines, which can serve behind-the-meter loads for large commercial or industrial users, could provide an additional 5.1 TW of capacity and 14,000 TWh of annual energy generation,” said the report.
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