More Renewable Power Coming, Thanks to State Initiatives

Installations of wind and solar projects is expected to increase

U.S. investment in clean energy was down in 2012 after breaking records all through 2011, but rapidly declining installment costs mean deployments are likely to continue to rise, according to new analysis from Ernst & Young LLP, a multinational accounting firm.

The report ranked the renewable energy "attractiveness indices" for all 50 states, and those numbers remained similar -- California and Texas continue to dominate the market, with Hawaii making the strongest jump last year through significant solar and wind gains.

But the broader national picture seems to be changing dramatically. Renewable energy accounted for a record 49 percent of added capacity in 2012, and deployment is expected to continue to rise as costs continue to fall. And while inconsistent policies from state to state have often hampered renewable energy development, technological improvements mean that if a state isn't amenable to large-scale utility installations, it's probably more hospitable to residential-scale distributed installations.

While the wattage of renewable energy installed rose in 2012, it was mostly in the same states that have been dominating the market for years. The resources the states exploited to supply this energy, however, changed significantly. California, which has traditionally ruled over the solar market, continues to do so, but the state is also making major strides in wind power deployment.

Mike Bernier, leader of Ernst & Young's Tax Credit Investment Advisory Services practice and co-author of the report, said issues around availability and the state's ability to connect wind power to the grid are being resolved. "People are planning on it being there," Bernier said. "There's a lot of grid construction underway, and projects are further along."

California ranked as the fifth most attractive state in the long term for wind power. Texas was No. 1, but Bernier said he thinks that might also move in the opposite direction. While Texas has plenty of space to house vast swaths of wind farms, it has run into a generation problem: Texas weather. The problem is that when Texas is hottest -- and thus when the wind turbines need to be spinning fastest -- there's no wind.

Instead, Bernier anticipates solar making a major push in Texas, since it would be a much more productive energy source during those sweltering peak consumption periods. "Solar matches extremely well for the load, in the fact that the days it's hottest, solar power produces the most power," Bernier said.

While Texas and California overhaul their renewable energy portfolios, Hawaii looks like it will increase its capacity for everything. While solar is already a prominent resource on the islands, the state is building up its wind capacity and also has significant existing potential for geothermal energy in its multiple dormant volcanoes.

"Power is very expensive" in Hawaii, Bernier said, given that much of it is petroleum-based at the moment. Renewables are becoming more popular. However, technological improvements are making installing them more cost-effective. "It's something that's taking off as technologies improve and people get more comfortable with them," he added.

'Drop dead' dates drop
Bernier thinks recent changes to qualification standards for the popular production tax credit (PTC) and investment tax credit (ITC) could be even more significant than individual state activity for American's renewable energy development, however. Prior to 2013, project developers had to have installations producing energy by the end of the calendar year in order to qualify for the tax credits.

This year, the Internal Revenue Service has redefined the eligibility for the tax credit so that projects have to have begin "physical work of a significant nature" or have already paid 5 percent or more of the total cost of the facility to be eligible for the tax credit under the "safe harbor" rule.

http://www.scientificamerican.com/article.cfm?id=more-renewable-power-coming-thanks-to-state-initiatives