Editor’s Letter: Facing Challenges

The renewable energy industry dodged a bullet in 2009 and 2010 when the American Recovery and Reinvestment Act, along with the Section 1603 Treasury Grant program, kept projects alive despite the economic recession.

Still more challenges lie ahead: the federal stimulus programs are ending and the economic recovery — along with demand growth — remains paltry at best. On Capitol Hill, talk has shifted from stimulating the economy to cutting deficits. The prospects for long-term, low-cost natural gas supplies don’t help the renewable industry, either. Renewable energy should prepare for some setbacks in the coming months.

Encouraging signs still can be found. Last month, Minnesota Power said it would speed up development of a 105-MW wind product in North Dakota at the urging of its regulatory commission, which had its eye on expiring federal incentives. In California, Google and Citibank are investing millions of dollars in hundreds of megawatts of wind capacity destined for sale to Southern California Edison.

And, as our cover feature points out, activity remains promising with concentrating solar power projects.

Then there are the renewable portfolio standards in place in around two-thirds of U.S. states. These standards, perhaps more than any other single factor, are driving investment and construction. But if project economics don’t pencil out — and here is where the federal incentives are critical — electric power from new renewable projects often can be uncompetitive.

In what must be a realization that time for the stimulus money is running out, the Department of Energy put on hold its loan guarantee for the 468-MW Cape Wind offshore wind project in Massachusetts to focus resources on projects more likely to be underway by September 30.

At the news, Siemens stepped in to say it was “willing and able” to provide debt and project finance for the $2.6 billion project. (Which raises the question, with Siemens stepping up was a government loan guarantee ever really necessary?) As of this writing, the outcome was undetermined.

On the plus side, the economy is growing, slowly. That’s in contrast to 2009 and 2010 when the power generation sector saw decreasing demand for the first time in decades. Had Congress not funded the stimulus and other programs in 2009, the renewable energy industry may well have collapsed. That danger is much less acute today.

What’s more, sea changes are underway across much of the power generation sector. Old, inefficient fossil-fueled units are being retired and replaced with natural gas generation and — on occasion — renewables.

But the likely loss of many federal incentives won’t help the recovery, offer a push to green the economy or enhance the prospects for new renewable energy projects.

After this issue, I turn over the reins of editing Renewable Energy World North America magazine to my colleague Jennifer Runyon. I had the rare pleasure of being the launch editor in September 2009 and of guiding its content; it’s been a treat working with so many talented and energetic contributors. I am not going far: I remain chairperson of our related renewable energy conference. I look forward to seeing all of you in Long Beach next February for that event!

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Renewable Energy World's content team members help deliver the most comprehensive news coverage of the renewable energy industries. Based in the U.S., the UK, and South Africa, the team is comprised of editors from Clarion Energy's myriad of publications that cover the global energy industry.

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