Forward spark spreads suggest rising profitability of US renewables as sector matures

Ahead of the S&P Global Platts Global Power Markets conference in Las Vegas, April 8-10, 2019, The Barrel presents a series of articles on the global and US electricity sectors. In this last post of the series, Steve Piper analyzes S&P Global Market Intelligence data to show that renewables are increasingly able to compete with conventional generation. Wind and solar photovoltaic (PV) electric facilities only account for an estimated 11% of US generation, but they are fast closing on a tipping point where they may outperform conventional generation as an asset class. Several factors have come together to drive this result, starting with a rapid decline in costs for new renewable facilities, both wind and solar, that has offset the advantage to natural gas generation brought about by abundant and economical supply. Improved efficiency of renewables also means every facility can generate more power, delivering greater value and revenue to the off-takers. Declining cost and increased output drives a cycle of improving competitiveness and returns when compared to conventional generation. Supportive economic policies such as Investment Tax Credits (ITC) and tradeable Renewable Energy Certificates (RECs) also provide a source of financial support to green energy, although both are expected to… continue reading

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Source: CTRM Center

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