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It's Rocky, but the Transition to Clean Energy is Well Underway

The sequester. Continued Congressional gridlock. Declining levels of venture capital funding. High-profile bankruptcies. The boom in low-cost natural gas. As the Obama administration seeks to find its footing for a second term, there appear to be plenty of reasons to hold a very bleak outlook for clean tech in the U.S. and beyond.

But when we take a look at some other indicators — perhaps quieter data points that don’t make the breathless headlines or trending tweets du jour — a different story is emerging. Even with all the hype about fracking, natural gas was not the No. 1 source of new electricity generation in the U.S. in 2012. In fact, it was wind power, accounting for 41 percent of new capacity compared with 33 percent for gas, according to the Energy Information Administration. Add in solar, biomass, geothermal, and other renewables (excluding large hydro), and nearly half, 49 percent, of the nation’s new power capacity came from clean-energy sources. It’s worth noting that in new wind-power deployments, 70 percent of the equipment is now manufactured in the U.S. And in January of this year, all of the new generating capacity in America — every megawatt ­­— came from renewables, according to the Federal Energy Regulatory Commission. 

Obviously any single month can be a statistical anomaly, particularly in the dead of winter, but it’s still a pretty notable factoid. And in Europe in 2012, the story was even more dramatic, with nearly 70 percent of new generation capacity (more than 31 GW) from clean sources across the EU. Solar led the way there with 37 percent, with wind adding 26.5 percent, both more than the 23 percent added from natural gas, which remains much more expensive than in the U.S.

At the same time, coal-fired electricity in the developed world continues its sharp decline. In the U.S., practically every day brings news of old coal plants being retired or plans for new ones being shelved. In late February, American Electric Power said it would shutter three Midwestern coal plants with a combined 2,000 MW of capacity in an emissions lawsuit settlement, replacing some of the capacity with wind and solar resources in Indiana and Michigan. And Los Angeles Mayor Antonio Villaraigosa said he will end the city-owned utility’s contracts for coal-fired power — some 40 percent of its current energy mix — by 2025. Coal-fired generation as a percentage of the nation’s electricity mix has declined in each of the past seven years, from nearly 50 percent in 2005 to less than 38 percent last year.

This, my friends, is an energy transition. As Clean Edge co-founder/managing director Ron Pernick and I note in our current book Clean Tech Nation, the developed world does not need new coal or nuclear. The future is an energy mix of renewables, energy efficiency, and natural gas. And our path to that future is well underway.

But transitions of this magnitude are never smooth, and the rocks in the path right now are tripping up (if not injuring) policymakers, investors, entrepreneurs, and corporations. It’s not just an evolution from dirty to clean energy, but a transition with clean tech itself — from R&D to deployment.

Many others have noted this: the clean-energy industry is growing up. As exciting as scientific breakthroughs can be — and dozens of them were on display this week at the annual ARPA-E Innovation Summit outside Washington, D.C. — state and federal policy, in some cases, needs to shift focus to putting steel in the ground (or silicon on the roof). That’s why I tend to agree with my friend Jigar Shah, CEO of the Carbon War Room and co-founder of solar financing pioneer SunEdison, in questioning President Obama’s choice of MIT professor Ernest J. Moniz as the next Secretary of Energy. I’d rather have seen one of the former governors widely rumored as candidates — Jennifer Granholm, Bill Ritter, or Christine Gregoire — who helped lead efforts to make clean-tech deployment and jobs a significant part of their states’ economies. 

Another respected clean-tech compatriot, venture capitalist and blogger Rob Day of Black Coral Capital in Boston, just weighed in on this transition within clean tech, sharing his firm’s new investment philosophy in his regular guest column for Greentech Media. “From our perspective, Day says, “the opportunity now lies in market reinvention. Figuring out how to accelerate how people buy, sell and deploy these new technologies, in scalable ways. It means focusing on new business models, not solely on breakthrough technology innovations.”

One could easily attribute the current boom in U.S. solar deployment, for example, to (along with falling PV prices) the revolution in financing that allows residential and commercial customers to lease rather than own their rooftop systems. To unleash the next wave of deployment, the industry’s focus is now on reducing soft costs – in installation, permitting, and the like. Most of those breakthroughs won’t come out of research labs (and, to its credit, DOE’s SunShot program has made this a priority).

Passionate arguments will rage over this — but that’s a good sign that, as Buffalo Springfield sang 45 years ago about a different kind of transition, “There’s something happening here.” Any goal as audacious as this one — transforming the world’s energy use — is certainly worthy of debate. 

Lead image: Solar panel sun via Shutterstock

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