Seeing that July was the hottest month worldwide since record-keeping started 140 years back is not the time for zero-carbon energy generation to slow down. That’s specifically what occurred in the first half of 2019 in America. In actuality, renewable energy generation declined 1.1% by the year-ago period, based on recently released data compiled from the U.S. Energy Information Administration (EIA).
The conclusion is far from absolute, but it should only be a short-term hiccup. There were other fine details in the EIA dataset, including the remarkable collapse of coal-fired power plants. And the flexibility of America’s decreasing fleet of nuclear reactors. Here are the reasons why the decline happened and why investors shouldn’t worry.
A Small Change Goes a Long Way
The US produced 399 gigawatt-hours (GWh) of electricity from renewable sources. In the first six months of 2019, corresponding to 404 GWh in the same period of 2018. Again, not right, but there are simple reasons for the year-over-year decline:
The United States began 2019 with 8% more installed wind power potential than it possessed at the start of 2018. But American wind turbines have produced only 0.8 percent more power in the first half of the year.
Investors may thank lower end resource for the decrease, which is out of everybody’s control. The nation is expected to add almost 13,000 megawatts of electricity capacity — the second-highest yearly total ever in 2019.
Hydropower’s Return to the Average
The United States saw a 5.6% decrease in electricity produced from hydropower in the first six months of 2019 compared to this year-ago period. That was totally presumed as water runoff totals slowly return to historical averages after record output in 2017.
Solar Power Rise
The United States generated 11 percent more power from solar panels. In the first half of 2019 compared to this year-ago period. Development was evenly divided between small-scale and utility-scale installations, showing an desire for the distributed energy source.
Electricity companies are increasingly relenting to pressure from clients and states to adopt cleaner energy. Con Edison (ED), among the biggest investor-owned utilities, acquired solar and wind projects worth $2.1 billion last year.
The company is currently the second-largest solar manufacturer in North America. Minneapolis-based Xcel Energy (XEL) has moved from a coal-first power business to intending to produce zero-carbon power by 2050. Renewables are even beginning to put pressure on natural gas, which is a cleaner-burning fossil fuel.
There are also reasons for optimism regarding America’s Continuing decarbonization attempts:
Nuclear is Resilient
- Despite a small number of reactor closures, America’s nuclear fleet generated a record amount of power in 2018. The country’s most significant source of zero-carbon emissions stayed only 0.6percent off last year’s record speed in the first six months of 2019. Although proposed reactor retirements will gradually start to lessen contributions.
Coal is Dropping
- The US has reached a tipping point with coal-fired power plants by leaving increasingly more significant and younger facilities. In actuality, June 2019 was the first time in decades that power generation did not top 100 GWh for the sixth month. The fleet recorded just 78 GWh, a 23% drop from June 2018. That stunning collapse is very likely to induce a decrease in power sector carbon emissions in 2019. Regardless of the stumble of renewable sources.
Natural Gas Reductions
- The United States produced 6 percent more power from natural gas in the first half of 2019 compared to this year-ago period. That year-over-year data was 14% this time last year. The increase can be explain by new facilities in Appalachia, although they have replaced coal-fired power plants since the default power source through the summertime (when energy usage peaks). The net result is a sudden decrease in carbon emissions.
Lower Overall Energy Intake
- The United States generated 2.3percent less total electricity in the first half of 2019 compared to this year-ago period. Therefore, renewables really gained market share.
The year-over-year decline in energy generation has not had significant implications for America’s decarbonization attempts, renewable energy stocks, or renewable energy sector leaders — many of which remain optimistic about the future of solar and wind power in the US.
Businesses Are Not Panicking And Neither Should The Public
There are lots of reasons for enthusiasm about America’s trajectory to respond to climate change. Consider the country exited June 2019 with almost 97,960 megawatts of installed wind power potential.
Which took years to expand, but possessed a development pipeline of 33,000 megawatts. In fact, the domestic market is mature enough to enter into a significant new phase: repowering.
Repowering is the term applied to replace deteriorating Wind Turbines with newer, more practical designs and it is becoming big business. General Electric (NYSE: GE) has completed over 2,500 such projects, totaling nearly 4,000 megawatts of power, since the start of 2017.
It assumes to repower an extra 3,000 megawatts by the end of 2020. The average repowered turbine marks a 20% growth in yearly energy generation. Making the plot of land more expensive as time passes. The repowering marketplace in the United States could climb to $25 billion each year by 2030.
Meanwhile, NextEra Energy (NYSE: NEE) stays increasingly optimistic about the renewable energy future of the country. Contemplating it produces more electricity from solar and wind energy than any other firm on earth. Possesses more installed wind capacity than all but seven countries. Investors should be confident in its insights.
The company expects electricity produced from wind and solar farms in the US will be more affordable than even natural gas by the end of 2023. That’s with energy storage incorporated. Underpins the company’s assurance that renewable energy could create up to 50 percent of the nation’s total electricity by 2030. If that financial tipping point is reach.
That helps illustrate why Brookfield Renewable Partners (NYSE: BEP), one of the world’s biggest producers of hydroelectricity, is furiously investing in new solar and wind power capacity. The business created 78% of funds from operations (FFO) from hydro assets in the first half of 2019.
But dedicated to building at least 2,500 megawatts of solar energy in the next five years. That signifies one of the single most significant investments in solar power worldwide. Explains the company’s dedication to broadening its profit engine.
In other words, investors may see an introduction of doom-and-gloom headlines about the drop in renewable energy production in the United States. But it means nothing for people who have a long-term mindset.