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Renewable Energy Economic Potential

Types of Renewable Generation Potential

The report Estimating Renewable Energy Economic Potential in the United States: Methodology and Initial Results describes a geospatial analysis method to estimate the economic potential of several renewable resources available for electricity generation in the United States. Economic potential, one measure of renewable generation potential, is defined in this report as the subset of the available resource technical potential where the cost required to generate the electricity (which determines the minimum revenue requirements for development of the resource) is below the revenue available in terms of displaced energy and displaced capacity.

The assessment is conducted at a high geospatial resolution (more than 150,000 technology-specific sites in the continental United States) to capture the significant variation in local resource, costs, and revenue potential. This metric can be a useful screening factor for understanding the economic viability of renewable generation technologies at a specific location. In contrast to many common estimates of renewable energy potential, economic potential does not consider market dynamics, customer demand or most policy drivers that may incent renewable energy generation.

Generalized Method Calculation Flow

The method is applied to several renewable generation technologies under a variety of assumptions—including land-based wind, utility photovoltaics (UPV), distributed photovoltaics (DPV), hydropower, geothermal (hydrothermal resource only), and biopower (dedicated combustion plants only, not including co-firing), primarily from a 2014 perspective.

Estimates are highly sensitive to the specific assumptions used related to both renewable generation cost and avoided cost. Across the three distinct formulations of the definition used in this analysis, economic potential estimates varied by almost 30-fold. The capacity value of renewable generation, external costs and associated discount rates, and the declining value of variable generation with increased penetration have a major impact on estimates.

This work presents one method for assessing economic potential. The preliminary results of this application are intended to demonstrate the utility of the method described, and serve as an initial estimate of the range of economic potential, as well as an exploration of a number of the factors that influence that potential. The model is expected to be updated and refined to reflect new data and analysis as they become available.

EERE Webinar: The Economic Potential of Renewable Power

Tuesday, September 1, 2015 - Presentation slides
This webinar discussed a recent report analyzing the economic potential of renewable power in the United States. The report, Estimating Renewable Energy Economic Potential in the United States: Methodology and Initial Results, describes a geospatial analysis method to estimate the economic potential of several renewable resources available for electricity generation in the United States.