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Houston — Power industry observers differed Friday over new research concluding that solar power poses a bigger threat to wind generation development than other types of generation.

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The US Energy Information Administration renewable energy capacity forecast indicates total utility-scale solar capacity -- mostly photovoltaic, but including some thermal -- will overtake total wind capacity in 2037, with 139.3 GW, compared with wind's 122.5 GW.

In a paper released Thursday, Dan Shreve, Wood Mackenzie Power & Renewables global head of wind energy research, states "solar power represents the largest threat to the US wind industry."

The paper includes a graphic analysis of the relative costs of new entry and net revenue for wind and solar generation in the Electric Reliability Council of Texas' West Hub for 2020 through 2030, with solar having significantly more net revenue/kW-year.

"The implications of this metric are significant from a strategic standpoint," Shreve says in the paper. "Although wind and solar power will share similar [levelized costs of energy], the time at which they are generating that low-cost power differs substantially, both from an hourly perspective, as well as a daily or even monthly perspective."

Wind farms typically generate more power during lower-demand periods of the day, such as mornings and evenings, and during lower-demand periods of the year, such as winter and spring, Shreve says.

But Travis Whalen, a power market analyst at S&P Global Platts Analytics, questioned the idea of a direct competition between solar and wind projects in investor portfolios, as "each technology is really competing against the field."

The EIA's estimate, in January, of the total overnight cost of onshore wind projects continues to compare favorably with all solar projects, but remains more than double the cost of advanced natural gas or oil-fired generation, in terms of $/kW of capacity. "Overnight cost" is the cost of construction of a project, assuming no interest expenses during the construction period.

"However, I do think it's valid to point out the factors making solar a more attractive investment at a time when wind investment will be getting less attractive," Whalen said. "Both will continue to see additions alongside new thermal generation, but a combination of the end of the production tax credit and the ever-present transmission constraints that wind faces in reaching premium markets should slow that pace of installations in the coming years."

'DIFFERENT DIRECTIONS'

As that pace slows, solar and battery costs continue to decline, "driving a significant increase in the rate of solar additions over the next decade, so the two markets very much seem to be trending in different directions," Whalen said.

David Sapper, director of market intelligence for Midcontinent Independent System Operator markets at Customized Energy Solutions, said improvements in storage technologies "could continue to do more for solar than wind generation ... at both retail and wholesale levels ... in terms of reducing associated local and regional grid expansion needs and costs."

But while solar can more easily be located at population centers, in small increments, its land intensity (requiring five to seven acres/MW, versus wind's 0.75 acres/MW) precludes construction of significant utility-scale solar centers in cities, Wood Mackenzie's Shreve says.

"The rapid evolution of utility-scale battery technology" can reshape load curves so as to optimize renewable revenues, Shreve says. This favors solar technology, as its generation profile "is more consistent on a daily, weekly, and monthly basis."

"A storage asset co-located at a wind facility may not be able to execute a full charge/discharge cycle for days or weeks at a time," Shreve says.

Among the strategies Shreve recommends for the wind industry to compete with solar power is developing "infrastructure that supports the growth of the US offshore wind market," as "offshore wind is emerging as a viable alternative, but a great deal of investment must be placed in supporting infrastructure and supply chain resources to reach the next level of cost reduction."

The EIA's estimate of the overnight cost of offshore wind is more than four times the cost of onshore wind, more than three times the cost of solar PV projects, and 50% more than the cost of solar thermal projects.

-- Mark Watson, markham.watson@spglobal.com

-- Edited by Valarie Jackson, newsdesk@spglobal.com