What Are The Two Fastest Growing Renewable Energies In The Us?
Renewable energy has seen rapid growth in the United States over the past decade. According to the U.S. Energy Information Administration, renewable energy provided nearly 23% of U.S. electricity generation in 2022, up from 16% in 2015. This growth has been driven by several factors, including declining costs, technological advances, supportive policies, and increased corporate and consumer demand for clean energy.
While hydroelectric power previously dominated renewable generation, wind and solar energy have emerged as the fastest growing sources. In 2021, wind surpassed hydro as the top renewable energy source, providing over 9% of U.S. electricity. Solar has also seen exponential growth, accounting for 4% of generation in 2021, up from less than 1% in 2015.
The U.S. Department of Energy has set a goal for renewables to provide 50% of electricity generation by 2035. Meeting this target will require continued rapid growth from the most promising renewable technologies.
#1 Solar
Solar power is the fastest growing renewable energy source in the United States. According to the Center for Climate and Energy Solutions (C2ES), solar generation has grown more than 50-fold since 2008. In 2021, solar accounted for 3% of U.S. electricity generation, up from just 0.1% in 2008 https://www.c2es.org/content/renewable-energy/. The U.S. Energy Information Administration (EIA) also reports that utility-scale solar power capacity has seen rapid growth, increasing from 2 gigawatts (GW) in 2010 to over 122 GW in 2021, a compound annual growth rate of 42% https://css.umich.edu/publications/factsheets/energy/us-renewable-energy-factsheet.
There are several reasons behind the rapid growth of solar power in the U.S. Firstly, the cost of solar panels and installation has dropped dramatically in the past decade, making solar much more affordable for utilities and households. Secondly, federal and state policies like tax credits have incentivized solar adoption. Finally, businesses and consumers are increasingly attracted to solar’s environmental benefits and energy independence.
#2 Wind
Wind energy has seen tremendous growth in the United States over the past decade. According to the U.S. Energy Information Administration, utility-scale wind power capacity has more than tripled since 2010, increasing from 25 gigawatts to 122 gigawatts by the end of 2021. In 2021 alone, wind power capacity grew by nearly 13% as over 3 gigawatts of new wind turbines were installed across the country.
There are several reasons behind the rapid growth of wind power in the U.S. First, the cost of wind energy has declined dramatically in recent years, making it competitive with traditional energy sources like coal and natural gas. According to Lazard’s annual Levelized Cost of Energy Analysis, the cost of onshore wind power fell by over 70% between 2009 and 2020. As the prices have fallen, wind has become an increasingly attractive option for utilities and energy providers.
Secondly, state-level policies such as renewable portfolio standards have driven growth in wind capacity by requiring utilities to obtain a minimum percentage of their electricity from renewable sources. Over half of U.S. states now have renewable portfolio standards in place. These policies have incentivized major investments in new wind farms to meet the rising demand for renewable energy. According to the U.S. Department of Energy, roughly 60% of growth in U.S. renewable energy generation since 2000 can be attributed to state renewable portfolio standards.
Lastly, federal tax incentives like the production tax credit have made wind energy investments more financially viable for developers. Though the availability of these credits has fluctuated over the years, when they have been in place it has spurred development. The year 2021 saw high growth in part because developers rushed to qualify projects for the production tax credit before it was scheduled to be phased out. The long-term extension of the credits in the Inflation Reduction Act passed in 2022 is expected to provide continued support for wind growth this decade (Source: https://www.eia.gov/todayinenergy/detail.php?id=51618).
Cost Comparisons
According to Power Mag, over the past decade costs for solar projects have declined by 88%, from $0.359/kWh in 2010 to $0.039/kWh in 2020. Over the same period, costs for onshore wind projects declined by 56%, from $0.089/kWh to $0.039/kWh.1 Both solar and wind costs have declined dramatically and are now competitive with fossil fuel energy.
Looking at installation costs, Ecoflow reports that solar panels cost roughly $2.19 per watt, while wind turbines cost around $1.50 per watt.2 So while wind energy has a slight edge in upfront equipment costs, both are viable renewable options that can save money over fossil fuels in the long run.
Projections & Targets
Many states have set renewable energy targets to help drive growth in wind and solar power. According to a report by the Union of Concerned Scientists, by 2030 there are proposed targets for the percentage of electricity from renewable sources for each state. For example, California has a target of 50% electricity from renewables by 2030, Texas has a target of 38% by 2030, and New York has a target of 40% by 2030 (Strengthening the EPA’s Clean Power Plan, p. 8). These state-level targets help create demand and growth for wind and solar energy projects to meet the rising renewable energy goals.
At the utility level, many companies have made commitments to increase their use of renewable energy as well. For example, MidAmerican Energy has a goal of 100% renewable energy for its Iowa customers, with wind making up most of that generation (UCS Technical Comments on EPA Clean Power Plan, p. 17). Many utilities across the U.S. have renewable energy and emissions reduction targets that are driving investments in wind and solar.
Challenges
Integrating large amounts of variable renewable energy like solar and wind into the power grid presents challenges. Renewable generation depends on weather conditions and is intermittent. This is different than steady baseload power from fossil fuels and nuclear. According to Challenges of integrating renewables into today’s power grid, 62% of global electricity will come from renewables by 2050. Grid operators must balance electricity supply and demand in real time as the availability of renewable resources changes. There are strategies to mitigate these integration challenges.
One major challenge is the need for energy storage. When solar or wind generation is greater than demand, excess electricity must be stored for times when renewables cannot meet demand. Large-scale, cost-effective energy storage is still lacking. Batteries are an option but limited. Other storage methods like pumped hydropower require specific geographic conditions. According to Integrating Variable Renewable Energy: Challenges and Solutions, storage will play a crucial role in grid integration as renewable penetration increases.
Policies
Federal and state policies have played a major role in driving the growth of renewable energy in the United States. The federal government has implemented a number of policies that support renewable energy expansion, including tax incentives, loan guarantees, and other funding mechanisms. According to the Lawrence Berkeley National Laboratory, federal policies constituted 45% of total renewable electricity growth in the U.S. by 2018 (Clean Power 2023).
One of the most impactful federal policies has been the investment tax credit (ITC) and production tax credit (PTC), which provide tax incentives for solar and wind energy projects respectively. These tax credits have helped spur significant investment and development in the solar and wind sectors. The PTC for wind is credited with enabling the U.S. wind industry to grow over 35% annually between 2008-2020 (Forbes 2023).
At the state level, renewable portfolio standards (RPS) have been among the most important drivers. As of 2021, 30 states and Washington D.C. had adopted RPS policies, which require electricity providers to supply a minimum portion of power from renewable sources. These policies create guaranteed demand for renewable energy and pressure utilities to invest in renewables. According to the Lawrence Berkeley National Lab, state RPS standards made up about a quarter of renewable energy growth as of 2018 (EPA 2023).
Companies & Jobs
The renewable energy sector is creating new jobs across the country. According to the Department of Energy, there are just over 8 million jobs in renewable energy today. In 2021 and 2022, clean energy jobs grew 5X faster than overall U.S. employment (source).
Some of the leading companies creating renewable energy jobs include First Solar, SunPower, Tesla, Vestas, Siemens Gamesa, GE Renewable Energy, and many more. Many traditional energy companies like Duke Energy, Dominion Energy, and PG&E are also rapidly growing their renewable energy divisions and hiring for positions in solar, wind, hydropower, geothermal, and more.
The DOE projects that solar jobs will grow by 7% in 2023 while wind jobs grow by 12%. Overall, renewable energy generation jobs are projected to grow by 14.5% over the next year (source).
Consumer Adoption
The residential solar market in the U.S. has seen tremendous growth over the last decade. According to the Solar Energy Industries Association (SEIA), the U.S. residential solar market grew at a compound annual growth rate of 62% from 2010 to 2020, reaching 4.3 gigawatts (GW) of installed capacity in 2020. SEIA projects the residential solar market to add another 4 GW in 2021. Key drivers behind this growth include declining costs, supportive policies, innovative financing options, and increased consumer awareness of solar.
Likewise, corporate renewable energy purchases have accelerated in recent years. As per SEIA, corporations contracted a record 10.6 GW of renewable energy capacity in 2021, more than double the amount contracted in 2020. This was driven by over 130 large companies like Amazon, Walmart, Apple, and Google signing agreements to purchase renewable energy. Many corporations are setting ambitious carbon reduction goals, with some targeting 100% renewable energy, further propelling growth in corporate solar and wind contracts going forward.
Future Outlook
According to the International Energy Agency (IEA), solar and wind power are projected to dominate renewable energy growth through 2030. The IEA forecasts that solar PV capacity will more than triple between 2021 and 2030 under current policy settings, while onshore and offshore wind capacity is set to double.1
Experts predict that solar will continue expanding in the residential and commercial sectors due to declining costs, while utility-scale solar farms and wind projects will see strong growth as well. The Biden administration has set a goal for a carbon-free electricity grid by 2035, which would require solar and wind to rapidly accelerate deployment over the next decade.2
However, experts caution that meeting renewable energy goals will require overcoming challenges like transmission capacity limits, supply chain issues, and policy uncertainty. With supportive policies and continued cost declines, projections suggest solar and wind can achieve high renewable energy penetration rates in the coming decades.
