Solar and wind energy have become cost-competitive without subsidies, according to Obama administration officials and outside experts.
Energy Secretary Ernest Moniz told reporters Monday that the price of solar has fallen so dramatically that the market can now grow without subsidies.
He was on a call previewing a policy speech the president made Aug. 24 at the National Clean Energy Summit in Las Vegas, a touchstone event for the Democratic Party.
Moniz told reporters that the administration supports Congress' extension of the tax credits, but "I certainly see solar growing" even "without subsidy." The cost reductions have "been incredible" for the solar industry, making for an improved "value proposition ... in many contexts."
He said the cost of electricity from rooftop solar panels could fall to as low as 6 cents per kilowatt hour very soon, which makes it "extremely competitive" with natural gas and other fossil and non-fossil power plants.
The cost of wind also has fallen dramatically in the last year, making the electricity produced by wind farms cost competitive with fossil fuels such as natural-gas-fired power plants, according to a report issued earlier this month by the Energy Department.
Moniz said the price drop has its roots in consistent public policy such as the Production Tax Credit for wind, a key federal incentive that the wind industry has fought hard to protect.
"Lower wind turbine prices and installed project costs, along with improvements in expected [production capacity], are enabling aggressive wind power pricing," the Aug. 10 Wind Technologies Market Report report reads. The report shows that prices dropped from nearly 7 cents/kWH in 2009 to 2.35 cents/kWh in 2014.
The price drop is "the lowest-ever average price in the U.S. market" for electricity, though the report admits it is "focused on a sample of projects that largely hail from the lowest-priced central region of the country."
The report says the cost trend placed wind "below the bottom of the range" of nationwide power prices in 2014. That makes wind power very favorable when compared to the fuel cost projections for gas-fired power plants through 2040.
The findings have some observers suggesting that the country, and the world, may be entering a new phase of growth for renewable energy.
Jules Kortenhorst, CEO of the nonpartisan Rocky Mountain Institute, told the Washington Examiner that the study shows the wind industry is cost competitive without subsidies.
Kortenhorst, who is working with the Chinese government on its energy strategy, says challenges persist in lowering the emissions of fossil fuel-fired electricity. But at the same time, the cost of renewables is shrinking rapidly, making solar and wind "competitive even without subsidies," he said.
But the American Wind Energy Association, representing the wind industry, says it is not time to consider eliminating the incentives.
"Wind energy is increasingly cost-competitive in several parts of the U.S., but we need stable, predictable policy to continue bringing this consumer benefit to every corner of the country," Tom Kiernan, the group's CEO, said earlier this month. "Policy stability will keep this American economic success story going."
Congress allowed the wind production credit to expire at the end of last year. The Senate Finance Committee this summer passed a measure that would temporarily re-instate important tax credits for wind energy, but did nothing for solar tax credits that phase out at the end of next year.
Republicans have generally opposed the wind and solar subsidies as an affront to free-market principles. But that can be a mixed bag among Republicans. Some, who are in states with a lot of wind, tend to support the measures. Others may support the credits, but want them to gradually phase out.
The administration supports extending renewable energy subsidies indefinitely, but in a Republican-controlled Congress that is likely to be difficult.
Many in the GOP want all subsidies removed, favoring letting the markets decide which resources succeed. They argue that the government should not be in the business of picking winners and losers.