2016 Another Strong Year for Renewable Energy and Natural Gas

2016 Renewable EnergyContinuing a 3 year trend, 2016 saw renewable energy account for the majority of new electricity generation capacity in the United States.  The lion’s share of these additions came in the form of wind and solar power.

As is often the case, renewable energy generation peaked in the spring on a nationwide basis.  The spring typically sees a peak in hydroelectric power in the western part of the U.S. as rain and snowmelt drives hydro power. The Western United States also contributed the majority of the country’s solar power with 77% of total U.S. solar generation.  In Texas, the state’s massive installed wind base continued to churn out electricity for the Texas electricity grid which is separate from the other major U.S. electricity grids.

While 2016 also saw a large increase in solar power, most new solar capacity comes from small scale solar photovoltaic rather than large scale utility generation.  As of October of 2016 the U.S had a total of 12.6 GW of small-scale solar power installed.

Wholesale Electricity Rates Continue to Fall

Despite the fact that new capacity generation is coming largely from renewable energy sources, it is cheap natural gas that continues to put downward pressure on electricity rates.  Monthly wholesale prices for 2016 were lower than 2015; driven largely by lower natural gas prices.  The cost of natural gas delivered to power generators was 17% lower for the first 10 months of 2016.

Low rates for natural gas also contributed to an increased reliance on natural gas for electricity generation.  2016 saw, first the first time, natural gas surpass coal for electricity nationwide.  Although, in Texas this has been the case for a number of years.