Three extraordinary facts in 2012--lowest gas prices in a decade, record solar construction, and record wind installation--should end the oft-repeated, mistaken claim that shale gas is killing renewables.
As a result of massive shale gas production, 2012 saw the US natural gas price fall to below $2 for a brief period in April and natural gas for the year averaged $2.73, according to the Energy Information Administration. The 2012 gas price collapse followed years of steadily declining gas prices since 2008 when the national shale boom started flooding the gas market with massive new amounts of supply.
Yet, while gas prices have been falling as a result of shale gas, America has had a wind and solar boom that has coincided with the shale gas boom. Since 2008, the US has increased its solar capacity from 500 megawatts to about 7,000 megawatts or a 14-fold increase. And when gas prices reached their lowest levels in 2012, the solar industry had its best year ever, building an astonishing 3,000 megawatts last year.
If shale gas is not killing solar, how about wind?
Since 2008 and the start of the shale gas boom, US wind capacity has skyrocketed from 25,000 to 60,000 megawatts. Last year, when gas prices were at their lowest in more than a decade, the US wind industry, like solar, had its best year ever, building a record 13,200 megawatts of new capacity.
Do the facts that 2012 had low, low gas prices and new record amounts of solar and wind capacity mean that low gas prices help build wind and solar? Of course not.
But the facts that wind and solar had record construction years in 2012, while gas averaged $2.73 for a thousand cubic feet, mean that wind and solar can prosper even when gas prices are low, low, low. Wind and solar have sharply falling costs that are essential to their future as well as enjoy significant policy support at the federal and state levels.
Wind and solar are strong enough that they can prosper even when gas is below $3, as it was in 2012.
With gas prices now rising, the future of both is bright indeed!