Renewable power is getting the green light. In the past, the
pursuit has been largely enabled because of federal tax incentives and
mandates handed down by state government. Now, though, there are
encouraging signs that the demand for sustainable energy is getting
more and more support through voluntary means.
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Ken
Silverstein
EnergyBiz Insider
Editor-in-Chief |
Investing in green energy has its risks and its rewards. But
consumer awareness in combination with proactive leadership has thrust
renewable energy into the mainstream. Indeed, the dual realities that
fossil fuels are finite and clean air regulations will only strengthen
have prodded all stakeholders to seek cleaner alternatives.
"Five years ago, the voluntary green power market was focused
primarily on residential purchasers, and there were only a handful of
significant non- residential purchasers," says Douglas Faulkner,
acting assistant secretary for Energy Efficiency and Renewable Energy
at the U.S. Department of Energy. "The entry of commercial,
industrial, and government purchasers into the renewable energy market
has resulted in tremendous growth in the development of clean and
limitless renewable energy resources."
Faulkner's comments came during the 10th National Green Power
Marketing Conference in Austin last week. While there, the Energy
Department's National Renewable Energy Lab released a report saying
that voluntary power purchases accounted for 2,200 megawatts, which is
an increase from 167 MW -- 1,000 percent -- over the last five years.
The growth has been spurred by national retailers, universities and
manufacturers, along with various government agencies.
For at least the next half century, coal and natural gas will make
up the preponderance of fuels that produce electricity. Renewable
energy, however, will undoubtedly grow: The Energy Department points
out that average green energy price premiums have dropped by 8 percent
in the last five years. And that's a trend that could continue with
skyrocketing natural gas prices. Today, green power accounts for about
2 percent of America's electricity supply.
In states where wind or solar resources are plentiful, utilities
are often under mandate to supply a certain percentage of their power
from green energy. Utilities are understandably nervous about putting
capital into emerging technologies that may not have an immediate
payback and that may not adequately be recovered through the rate
base. But, some such as Florida Power & Light and Puget Sound Energy
are turning profits on their renewable energy investments.
"Wind is our best value," says Eric Markell, senior vice president
of Puget Sound Energy in Washington State. In Puget's case, wind power
provides "excellent" cash flow, giving the company a chance to recover
its initial investment in just six years.
Mandatory Rules
While mandatory rules may create more marketplace certainty,
renewable and other clean-energy technologies must continually strive
to be competitive to gain wider acceptance so as to supplant fossil
fuels at a faster rate, says the Energy Department. Over the last two
decades, the department says that it has invested billions in the
research and development of solar, wind, geothermal and biomass
technologies.
It's all helped bring down the cost of renewable energy forms.
Today, the cost of wind-generated electricity is about five cents a
kilowatt-hour compared to 80 cents a kWh in 1980. By 2012, the Energy
Department predicts such costs will come down to 3 cents per kWh.
Meanwhile, the price of a grid-connected residential solar system is
roughly 25 cents per kWh compared to $2 per kWh in 1980. By 2020, the
government agency expects the price of solar to be around 6 cents per
kWh.
"Using more wind power can quickly and effectively help alleviate
the natural gas crisis and stabilize volatile prices -- the more wind
power the U.S. installs, the less natural gas and other fuels are
needed for electricity generation," says Randall Swisher, executive
director of the American Wind Energy Association. "Wind farms can be
installed quickly -- typically within two years, with construction
requiring less than six months, faster than new fields can be drilled
or liquefied natural gas terminals built ... ."
To be sure, it won't be easy to supplant fossil fuel use. According
to the Industrial Energy Consumers of America, industrial energy
consumers can ill-afford higher power prices. They are already
weakened by a fragile economy and the threat of global competitors who
have cheaper access to power supplies. Price pressures will only
intensify and result in a continued threat to the country's economic
well-being, it says.
The Bush administration is fully attuned to this position and the
2005 Energy Law reflects that. The $16 billion package is weighted
heavily toward fossil fuel production that is now so prevalent in the
generation mix. But the administration and Congress didn't neglect
renewable energy, which will receive some favorable tax advantages and
millions in government funds to be spent on research and development.
Meantime, provisions that would require a federal renewable
portfolio standard were stripped from the law that passed. Conversely,
about 20 states have approved policies that require utilities to
provide wind, solar, hydro, biomass and geothermal options to
consumers. Those technologies are typically more costly than
conventional generation and, therefore, the states are trying to help
jump start their advancement by enacting portfolio requirements that
will spur investment.
Nevada is requiring its major power companies to gradually increase
their use of renewable energy. By 2003, Sierra Pacific Power Co. and
Nevada Power Co. must produce 5 percent of their power from renewable
sources. By 2013, they must generate 15 percent of their power that
way. The Bureau of Land Management there expects wind and geothermal
production to double in the next three years because of the new law.
Right now, about 300 utilities in 32 states offer renewable energy
alternatives. And while some programs are mandated, others are not.
Johnson & Johnson is the largest U.S. corporate purchaser of renewable
energy. It has committed to reduce its carbon dioxide emissions by 7
percent from its 1990 levels, and by 2010. The company says that its
green power use in 2004 accounted for 18 percent of its worldwide
electricity use.
"Investing in green power not only benefits the environment, but is
also a good business decision . because it provides the company with a
reliable and stable supply of energy," says Dennis Canavan, energy
manager for Johnson & Johnson.
Despite the obstacles, consumers and policymakers have said they
want to see green energy play a greater role in the nation's energy
formula. Capital is scarce and cost-effective technologies are not
widespread. But the persistence shown by renewable energy advocates is
paying off. Greater public-private support, they say, would allow
green energy to capture more market share.
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