If you want a quick overview of the state of electrical generation in the United States, just take a look at the Xcel Energy’s High Bridge Generating Station in St. Paul, Minnesota.
Opened in 2008 as a replacement for an aging coal plant, the station features a 534-megawatt natural gas facility looming over three solar panels that provide a sculptural element to the site — and 9.8 kilowatts of electricity. And as the Xcel Center goes, so goes the nation.
Last year, according to the US Energy Information Administration, photovoltaic panels accounted for just around a half of a percent of the nation’s electricity production. Natural gas provided 27 percent. Yet if photovoltaic seems more ornamental than a serious energy contender, the data over the past two years shows a dramatic increase in photovoltaic generation.
Both natural gas and photovoltaic costs have plunged in recent years. Some utility-scale photovoltaic projects in the West have power generation comparable to natural gas plants — in the hundreds of megawatts — and were built at costs competitive with other energy sources. At the same time, natural gas production is growing fast due to hydraulic fracturing and plummeting costs.
All this leads to a big question: As natural gas grows, will it clip solar’s success — or can the two be collaborators in creating a less carbon-intense energy system?
Fom 2013 to 2014, solar posted by far the highest growth rate of any power source, well beyond natural gas or wind. In the first three quarters of last year, a photovoltaic project was installed every three minutes in the United States, according to the Solar Energy Industries Association. Projections show that America’s 20 gigawatts of solar production will double in just the next two years.
“How did solar manage to get that much growth going over the last couple of years? The regulations and public policy are a large part of it,” says Stefan Reichelstein, a professor at the Graduate School of Business at Stanford University. “They have really driven the growth.”
The “investment tax credit” of 30 percent on residential and commercial projects has helped create more than 100,000 jobs in the solar industry, according to Tom Kimbis, vice president of executive affairs for the SEIA, the solar industry lobbying group. “The trajectory of growth has surpassed the predictions even of the policy makers who created it,” he says. “In solar we have made a public investment, just as we have with coal, oil, natural gas, and nuclear and hydro. And with that investment we’ve seen a phenomenal return.”
California is a good example: In addition to one of the nation's most reliable solar supplies, the state passed a standard calling for 33 percent of all retail electric sales to come from renewable energy by 2020. The state’s Go Solar program and large utility-scale projects have led to its number-one ranking for solar energy production in the country.
But 29 states also have renewable portfolio standards, helping fuel the growth of photovoltaic. SEIA’s list of the top solar states for installed capacity includes North Carolina, Texas, Arizona and Missouri.
Natural gas has also become much more widely available and in use to generate electricity. That boom derives from the hydraulic fracturing, or "fracking," revolution that began in an experimental phase in the 1970s and 1980s as a result of federal government-sponsored research. Fracking uses a mixture of water, sand and chemicals to drill through limestone and shale to recover natural gas.
After two decades of experiments, Mitchell Energy, which had worked extensively with government agencies, developed an innovative, inexpensive drilling technology widely credited with jump-starting the shale fossil fuel revolution. Today about one-third of all natural gas comes from shale.
“It’s been quite a spectacular shift” from coal to gas due to increasing supplies and dropping prices, says Frank Brock, senior energy market specialist for the advisory firm ICF International. “We’re in a gas surplus environment because of the shale in the Marcellus Region [in the Appalachian Mountains.] It’s really quite incredible, and that’s happened in just a few years.”
So while it’s true that photovoltaic installation rate grew faster than the natural gas installation rate over the past two years, new natural gas production still dwarfed the energy made from solar, adding more power to the grid than any other energy source.
A Sense of Synergy
So what does this rise in natural gas mean for the future of solar power in the US?
Solar advocates see natural gas as less a competitor and more of a complementary energy source. “Natural gas and solar are, to me, the two sources of power that many in the energy sector are looking at as the biggest players moving forward — at least for the foreseeable future,” Kimbis says. He argues that “great synergy” exists in deploying photovoltaic as an intermittent power source to supplement a baseline of natural gas that runs 24/7. “We’re not in a position to attack natural gas, because it’s a really nice fit with solar,” he says.
The photovoltaic market is really three separate markets with different engines driving their growth: rooftop, community solar and utility-scale solar. Utility-scale photovoltaic projects, which are mainly being constructed in the Southwest and California, will be affected themost by natural gas prices, according to Steve Fine, vice president for ICF International.
“They compete with natural gas because they sell into the wholesale market, but they are subsidized ... in return for a green premium, a renewable energy credit,” he says. “If natural gas prices continue to be low, that means that ratepayers will be paying more for energy from solar.”
Predicting the effect on rooftop and community solar is more difficult. Many homeowners deploy photovoltaic to take advantage not only of the sun but of tax credits. The falling price of solar panels makes photovoltaic “within striking distance, in economic terms, of new construction for traditional power-generation technologies, such as coal, natural gas and nuclear energy,” according to McKinsey & Company, the consulting firm.
Yet natural gas and photovoltaic each has its own set of challenges that could thwart future growth.
Natural gas faces environmental concerns over hydraulic fracturing and the cost of groundwater contamination, the use of chemicals and the leakage of pollutants during extraction. The environmental community is marshaling an effort against hydraulic fracturing, while some financial analysts point to a natural gas glut that could create a financial meltdown.
Solar faces its own issues, one of which is the 30 percent solar investment tax credit that lapses at end of 2016. And as the wind industry has discovered, there is no guarantee of renewing tax credits.
The wind industry uses a “production tax credit” it shares with geothermal and bioenergy. Congress put off passing the credit in 2014, finally doing so in two weeks before the end of the year. It's also allowed the credit to expire six times since it began in 1992. The Union of Concerned Scientists reported wind installations in years after those expirations dropped between 76 and 93 percent.
Could solar run into the same problem? The price of photovolataic panels would rise if the tax credit goes away. “That may put a damper on solar,” says Reichelstein. “Its cost curve would have to come down again in the future before it closes in on natural gas.”
But the natural gas industry has enjoyed its own hefty set of subsidies, From 1950 to 2010,naccording to a 2011 report prepared for the Nuclear Energy Institute, natural gas companies received $121 billion in subsidies, the majority coming through tax policies.
At any rate, clearly more than cost should factor in. As Reichelstein points out, natural gas “is costly and has environmental consequences,” from the drilling process to emissions from burning, whereas solar “is abundant and free.”
Indeed, while few experts expect solar electric generation to overtake natural gas anytime soon, the idea of its ascendance seems agreeable as the US government moves to reduce carbon emissions and the market moves to reduce risk. The most recent EIA forecast suggests natural gas overtaking coal in electricity generation by 2040, though faster retirement of coal plants could make that happen as soon as 2019. By 2040 renewable energy, including photovoltaic, will generate 16 percent of the nation’s electric needs, the EIA predicts.
For a less carbon-rich future, that’s not necessarily a bad outcome. As the main component of a platform for creating a less polluting power generation system, natural gas looks less like a competitor and more like a good companion to photovoltaic and other forms of renewable energy.
This story was originally published by Ensia, a magazine showcasing environmental solutions in action.