A new report from the National Renewable Energy Laboratory (NREL) suggests wind and solar generation could become cost-effective without federal subsidies if they are sited in the most productive locations.

“It is too early to say how strong the post-2025 market for renewables will be or whether it will be primarily market-driven or policy-driven. In any case, this analysis provides an in-depth examination of a number of potential renewable energy corridors that show some potential for being cost-effective relative to other utility-scale regional options in 2025,” concludes the study, “Beyond Renewable Portfolio Standards: An Assessment of Regional Supply and Demand Conditions Affecting the Future of Renewable Energy in the West.”

The report, which does not include small-scale distributed generation, underscores some uncertainties clouding the future of renewables after 2025, when requirements in most western states’ renewable portfolio standards (RPS) have culminated. Most western utilities have relied primarily on renewable resources located close to the customers being served, and “this appears to be enough to keep most states on track to meet their final RPS requirements,” the report says. But it adds that changes in several factors could make future renewable energy options more or less attractive, including trends in the supply and price of natural gas, greenhouse gas and other environmental regulations, changing consumer preferences, technological breakthroughs, and future public policies and regulations.

Nonetheless, the report projects positive “value proposition”—reasoned justification for believing that a corresponding investment in infrastructure would be responsive to a foreseeable demand if it were built—in a number of corridors around California (and the Southwest), and the Pacific Northwest.

Though several regions are identified as having surplus prime-quality wind potential in 2025, some—like Montana, Colorado—will face significant transmission constraints based on distance and terrain. The report also cautions that “future transmission costs and grid integration costs are difficult to forecast with precision.” Yet among the report’s regional resource-to-market paths ranked in order of the highest potential is the transmission of wind from Wyoming to Nevada, and from Wyoming to Utah.

By 2025, the report suggests, renewable projects under construction in the western U.S. as of 2012 can supply an estimated 86 TWh, but western states will need between 127 TWh and 149 TWh of renewables annually in 2025 to meet targets stipulated by current state laws. By 2025, meanwhile, California, Oregon, Utah, and Washington will have already developed most (if not all) of their easily developable prime-quality in-state renewable resources, the report projects, the report says. “Their less productive renewable resources could be sufficient to meet the balance of their forecasted 2025 requirements, but the cost is likely to be higher than the cost of renewable power developed prior to 2012.”

The study also provides projected cost changes from 2012 and 2015 based on estimates that do not take into account future federal or state renewable energy policies or tax credits. Compared to a cost benchmark value based on the projected future cost of a new combined cycle gas turbine (CCGT) in 2025 with natural gas priced between $7.50/mmBtu and $8.43/mmBtu, the results suggest that geothermal power will likely remain more costly on an all-in, per-MWh basis than the equivalent CCGT or other renewable options in the West by 2025. “For wind and solar built in ideal locations, the gap could become small,” the report says.

Wind power will generally see an overall cost decrease of 19% on a constant dollar basis but increase 9% in nominal dollars. All-in costs for solar power will decrease 25% on a constant dollar basis and will decrease 5% in nominal dollars. The study does not quantify the cost of integrating wind power and solar power.

Sources: POWER, NREL