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Investment in US clean energy to total $55 billion in 2020: Generate Capital

Highlights

Cofounder Shah says clean energy 75% of new capacity in 2020

Roughly 19 GW solar plus storage by 2023: report

Houston — US investment into wind and solar energy will total $55 billion in 2020, said Jigar Shah, cofounder and president of Generate Capital, Nov. 20.

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Shah, who spoke at a webcast sponsored by the Federal Reserve Bank of Dallas, said he expects 75% of all new electricity generation to be clean energy in 2020.

Shah, who founded SunEdison in 2003, said he agrees with US Energy Information Administration estimates that of the 41.9 GW of planned electric generating capacity additions expected in 2020, 44% will be wind generation, 32% solar PV, 22% will be natural gas fired, and 2% will be "other."

He pointed to a large amount of solar and wind projects now in the Electric Reliability Council of Texas's generation queue.

"Solar and wind are 94% of ERCOT's queue, with just a little bit of gas," he said. The total of wind and solar "represents a huge amount of overbuild in ERCOT, adding more stress to natural gas plant profitability."

He said allocations by private investors toward infrastructure funds have risen to 11% in 2020 from 2% in 2004 -- most of which is now being invested in clean energy.

The cost of capital just for utility-scale solar projects is down to between 4% and 5% in 2020 compared to 9%-10% in 2012. This is due to economies of scale that the fast growing solar industry has achieved, he added.

Solar plus storage

Another speaker on the Dallas Federal Reserve Bank webcast was Logan Goldie-Scot, of BloombergNEF. The analyst's comments were largely reflected in a BloombergNEF report released Nov. 23, "How PV-Plus-Storage Will Compete With Gas Generation in the U.S."

There are more than 19 GW of hybrid projects combining solar PV and storage projects "in the pipeline in the U.S. and expected to come online by 2023," according to the report. It said an additional 80 GW of projects are in state interconnection queues.

"The combination of ever-cheaper energy storage systems and state and federal policy support has heightened utilities' interest in hybrid projects combining solar PV and storage," the report said.

It added that existing solar plus storage hybrids are designed to "facilitate the integration of solar on the grid" by allowing a more stable output during regular generation hours, or, "by shifting solar energy to deliver peaking capacity."

BloombergNEF said the operating profile of the U.S. gas fleet is "diverging from region to region." Gas fleet capacity factors have reached new records in power markets where gas is the cheapest and coal capacity has declined rapidly.

"But the story is different in markets that have recorded higher shares of renewable penetration."