Renewable Energy, At Last

"...an unmistakable shift is occurring."

- Michael Northrop, RE Insider

It's finally happening. Anticipated since the 1970's, renewable energy deployment is beginning to take off in the U.S.

The evidence is spread around in a host of jurisdictions, companies, and policy settings in a messy, unevenly distributed array of dots on the U.S. map. However, when connected together, the cumulative evidence is unmistakable.

Seventeen states have mandated targets and timetables for renewable energy. Colorado voters established a renewable portfolio standard last Tuesday to have 3 percent of the state's electricity generated from renewables by 2007 and 10 percent by 2015. New York's Public Service Commission adopted an RPS in September to have 27 percent of the state's electricity produced by renewables by 2013, up from 19 percent today. California has promised to have 20 percent of the state's electricity generated from renewable sources by 2010 and last year Connecticut boldly promised that all state facilities would be buying half their energy from renewable sources by 2020 and 100 percent by 2050.

In June, thirteen western Governors agreed they would have 20,000 MW of renewable energy online by 2020. Many of these states do not yet have regulation or legislation approved in the same way that New York and Colorado do, but these Governors, Republican and Democrat alike, are sending an important signal that the partisan divide over clean energy may be ending.

Meanwhile, 15 states have created new funds to jump-start clean energy market development. It is expected that these funds will collect upwards of $4 billion through 2012. These states are now coordinating their efforts through a new Clean Energy States Alliance to enhance the impact of these dollars.

In a little known and not widely appreciated shift, more than 40 states have established net metering rules, which allow households and businesses to export surplus energy from their on-site solar, wind, fuel cell, or co-generation equipment back into the electric grid. In another positive sign, 25 states now offer some form of tax incentive for those purchasing renewable systems.

Concern about climate change is one of the factors driving the move to renewables on the state and municipal level. Eight states have explicit greenhouse gas reduction targets and several more are considering such a move. More than 190 U.S. municipalities have made commitments to address climate change. Almost all of these are working up plans to develop renewable energy options to lower greenhouse emissions. As a first step, a large majority have instituted methane recapture programs from their landfills.

A group of electric utilities is also beginning to move in the U.S. toward developing renewable resources. Austin Energy, SMUD, PG&E, and a number of other mostly public utilities have begun down this path. An Italian utility called ENEL has begun building a business in the U.S. almost entirely around renewable power generation. These utilities offer examples to others who heretofore have been resistant to change.

In the private sector, growing numbers of large companies are now asking for increasing amounts of renewable energy. Among these corporate buyers are IBM, Dow, Dupont, Alcoa, Intel, HP, Interface, Johnson& Johnson, Pitney Bowes, Staples, Baxter, FedEx Kinkos, General Motors, and Toyota. In an effort to bolster their ability to command the lowest price for renewable power, a Washington, DC-based organization called the World Resources Institute has gathered many of these companies into a buyers group that anticipates purchasing 1,000 MW of renewable energy by 2010.

On the supply side, many new entrants into the market, perhaps most especially GE, are sending signals that they expect the market for renewables to expand markedly. Navigant Consulting's Lisa Frantzis, reports that annual U.S. installations of renewable energy are expected to grow from under 900 MW a year in 2004 to over 4,000 MW by 2013. Equipment sales, Frantzis says, will grow from $20 billion a year in 2003 to $35 billion a year in 2013. These are serious numbers.

Meanwhile the carbon offset market is now moving millions of dollars towards renewable energy to offset the use of fossil fuels. Driven by concerns about climate change again, offsets are about to explode as a major corporate and consumer market for governments, companies, and even individuals. Swiss Re, the largest U.S. re-insurer, has decided it wants to offset 85 percent of its GHG emissions by 2010. Sensing an opportunity, it has begun researching a "zero footprint" business that would assist others who wish to offset their carbon emissions. Foundation and private investors report seeing a number of new business plans for other offset businesses in recent months.

In summary, an unmistakable shift is occurring. Sadly, though, our federal government lags significantly behind these nationwide trends in policy innovation. It is time now to begin thinking seriously at the federal level about what policies might further encourage a shift to energy independence and clean energy. In the entrepreneurial stew developing from the bottom up in America, there are plenty of good examples of pathways forward for federal policymakers to grab onto as they begin modeling a strong federal approach.

About the author...

Michael Northrop manages the Sustainable Development grantmaking program at the Rockefeller Brothers Fund in New York City. Northrop moonlights at Yale University where he teaches a graduate course at the Forest and Environment Studies school. Previous positions have included a stint as Executive Director of Ashoka, an international development organization working in more than 40 countries, at an investment Bank, First Boston in New York, and as a teacher at Anatolia College in Greece and Gadjah Mada University in Indonesia. Northrop also serves on the Advisory Board of Climate Change Capital in London and recently helped establish The Climate Group also based in London.

He can be reached at mnorthrop@rbf.org

reader comments on this story

-- Mike Holly, November 8, 2004

Too little, too late, too corrupt. Adding 8% renewable energy to the mix in a handful of states within ten years is hardly impressive. Meanwhile, the U.S. Congress is promoting the monopolization of both regulated and deregulated markets within the gas and electricity industries, which will allow utility monopolies to discourage and even block the development of competitive renewable energy alternatives by entrepreneurs. The $4 billion raised by the states for renewable energy development during the next 8 years amounts to only $10 million per state per year. I am sure they can waste that before accomplishing anything. Net metering accomplishes nothing since utilities can block the sale of the power. With oil and gas production declining worldwide, the U.S. is turning to a planned economy, environmental disaster and killing Arabs. America will be under a full-blown energy crisis, if not global climate change crisis, before these state renewable energy proposals are realized. Even the problematic sources of renewables they advocate will look good by then. These small amounts of renewable energy will not compensate for the increased environmental damage caused by the skyrocketing construction of new coal plants. These numbers are purely token efforts to make Americans feel like they are doing something toward national, economic and environmental security. The U.S. is moving backward not forward.

-- Graham Honor, November 9, 2004

Concentrated Solar Power can supply much more than that alone, the geothermal prospects are huge, biomass utilization for electricity especially for distributed generation has hardly been tapped, just installing wind power, though non polluting and relatively inexpensive is not enough as wind power does not constitute capacity unlike geothermal and solar hybrid power. A comprehensive federal approach must be applied to decrease the consumption of fossil fuels, and as the President is free of chains for his second term in office, the hydrogen economy could wait as reduction in emissions must be done now! Waiting for completely clean 100% emission free technology will only help more men women and children to die from the air and water pollution.

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