Renewables Build Head of Steam

U.S. renewable energy programs are building a head of steam. The questions surrounding the movement are whether such initiatives are reliable, cost effective and environmentally beneficial or whether they are merely feel-good efforts.

Renewable energy tied to wind and solar would have difficulty penetrating markets unless government interceded and provided tax breaks or instructed utilities to provide some green offerings. The goal is to create demand, which in turn attracts providers to the field and ultimately leads to the development of newer and better products and services. The end result is a cleaner and healthier environment. “Without the incentives, the market penetration is very small,” says Lisa Frantzis, director of renewable energy programs for Navigant Consulting, at a talk before the U.S. Department of Energy’s Energy Efficiency and Renewable Energy unit. “If you add the incentives, the level of activity significantly jumps.” Right now, 22 states have renewable portfolio standards while 9 more are considering rules to require utilities to provide some power from green sources. The federal government, meantime, may do the same. While Congress has failed to pass those measures in the past, the thinking now is that such action is inevitable. About 20 percent of all utilities nationally participate in green energy programs. Those 600 utilities are giving 40 million customers in 34 states the ability to purchase some level of renewable energy. Consumers in all states, however, can ensure the advancement of renewable energy by buying credits from utilities — energy that will be transmitted through the wires into someone’s home or business. California is one of the more aggressive states. It has a target of producing 20 percent and 33 percent of its generation from renewable sources by 2010 and 2020, respectively. Texas is also a leader, requiring more than 5,880 megawatts by 2015 and considering legislation to expand that to 10,000 megawatts by 2025. Utilities are embracing the challenge. Westar Energy, which is based in Kansas that has no mandatory green energy provisions, plans to develop up to 500 megawatts from renewable resources and do so between 2008 and 2010. “Westar Energy, like many utilities, is entering a time when new generation is needed,” says Jim Haines, CEO of the company. “When looking at the options we have to invest in providing electricity for Kansas’ growing needs, it is important that we evaluate renewable resources in addition to traditional-fueled generation.” The People’s Will Investing in renewable energy is definitely not risk free. 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, many such investments appear destined to have positive returns. Puget Sound Energy in Washington State, for example, says that wind is its best value. Currently, non-hydro renewable sources make up about two percent of the United States’ generating portfolio of 770,000 megawatts. Renewable energy advocates say that mandatory initiatives may have prompted the interest in wind and solar. But, now utilities are figuring out that they can minimize their exposure to volatile gas prices or ever-stricter environmental laws through portfolio diversification. The states have certainly been the leaders in winning recognition for sustainable energy. But, the federal government will likely follow suit. Natural gas shortages, along with concerns over all emissions, have created the political environment to make changes. At the same time, the technologies to produce green energy are moving beyond the nascent stage and into the promising realm, enabling developers to provide more reliable products that are becoming less costly. “There’s a growing recognition that a renewable portfolio standard at the federal level will pass,” says Eric Holdsworth, director of climate change programs for the Edison Electric Institute that represents incumbent utilities. “It will be a stepping stone to a climate change bill. Our members would say that a standard is inevitable but not advisable. They would rather have a long-term extension of the production tax credit that guarantees tax breaks to developers of wind energy.” Holdsworth went on to say in a talk before the Energy Department’s renewable unit that federal law would not pre-empt the initiatives that the states have already enacted, noting that those jurisdictions are in touch with their utilities and know the limitations. Until the federal government can act, the states will continue to facilitate green initiatives while many utilities will voluntarily do their part. Tampa Electric Company, for example, will convert its pilot green energy program into a permanent renewable energy program. The voluntary plan gives customers the option of purchasing blocks of energy produced from renewable sources rather than from fossil fuels. The program, which began in 2000 and has grown to 1,422 participants, enables customers to pay $5 a month to buy 200 kilowatt hour packages of green energy from biomass and solar. “Encouraging the growth of Florida’s renewable energy market will help the state reduce its growing dependency on natural gas for electric production and provide consumers with a diverse fuel mix less subject to volatile price fluctuations,” says Lisa Polak Edgar, chairwoman of the Florida Public Service Commission that is under a state mandate to ease the way for future green energy development. Clean air and clean water are top agenda items. And policymakers nationally are following the dictate of the people and enacting laws that require utilities to utilize renewable energy programs. While resistant at first, many companies are finding real benefits in that business strategy and the subsequent success has created even more forward momentum in the effort to broaden the nation’s generation mix. Ken Silverstein is an award-winning journalist who is the editor-in-chief of Energy Central’s publication, EnergyBiz Insider. With a background in economics and public policy, he has spent several years writing about the issues that touch the energy and financial sectors, and his work has been published in more than 100 periodicals. Republished with permission from CyberTech, Inc. EnergyBiz Insider is published three days a week by Energy Central. 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