green@work : Magazine : Back Issues : Fall 2004 : Special Section

SPECIAL SECTION

A New Reality for Renewable Energy
Growing political support powers renewable energy into the mainstream.

With oil and gas prices soaring amid deepening instability in the Middle East, renewable energy is emerging as a bright spot in the global energy economy—and is poised for a worldwide takeoff. According to a new study from the Worldwatch Institute, solar power generation has more than tripled globally in the past five years, and wind power generation has nearly quadrupled.

“Political will and the right mix of policies—not vast resource potential—have made wind and solar power the world’s fastest growing energy sources over the past decade,” says Worldwatch research associate Janet Sawin, author of Mainstreaming Renewable Energy in the 21st Century. In Germany, Japan, Spain and a handful of other countries, clear government commitments to renewable energy have overcome barriers and created the demand for these technologies that has led to dramatic growth, while advancing renewable technologies and driving down their costs.

With a fraction of the U.S. potential in wind power, Germany has more than twice as much installed wind capacity and is a world leader in solar and other renewables as well. And Japan, which has far less sunshine than California, uses and manufactures more solar cells than any other country.

“The experiences of Germany and Japan hint at the great potential for renewables in the United States, which is both geographically large and resource-rich,” says Sawin. “The technologies are ready—what we need is strong political leadership to vault renewables into the mainstream.”

Already, new renewables—including wind, solar, geothermal and modern bio energy—supply enough electricity for more than 300 million homes worldwide. (See charts for information on participation in green power programs among utilities in the United States.) In 2003, an estimated $20.3 billion—about one-sixth of total global investment in power generation equipment—was invested in new renewables. Within the next decade, this is expected to approach $85 billion annually. The growth rates of some renewables are closer to those of computers than the single-digit growth rates of today’s energy economies. “Some people dismiss this rapid growth rate in an industry they consider tiny, but this thinking is short-sighted and mirrors the attitude of IBM toward Microsoft in the early 1980s,” says Sawin.

The impressive growth potential of renewables is attracting big league corporate investors. Japan’s Sharp Corp. produces 27 percent of the world’s solar cells, while General Electric is now a world leader in the global wind business—two years after acquiring a dynamic young wind company.

Renewables have proved they can meet the energy needs of industrial and developing countries alike, and are offering real solutions to a world facing accelerating global energy demand and rising concerns about energy supplies and environmental impacts. In China, where lights have been going out in major cities because power supplies are not keeping up with exploding demand, renewables have the potential to provide clean energy from domestic sources and diversify China’s energy economy. Recognition of these advantages has led the Chinese government to consider an ambitious new renewables policy. In fact, at the recent International Conference for Renewable Energies held this past June in Bonn, Germany, China pledged to increase its use of small hydro, wind, solar and biomass power generation to 60,000 megawatts (the equivalent of 60 giant power plants), providing 10 percent of its generating capacity by 2010. With this announcement and the related new policies now in the works, China may be on the verge of becoming the world’s next leader in renewable energy.

The global transition to a new energy system will require significant upfront investments to develop new technologies and to bring costs down. But over the long-term it will provide benefits like improved global air and water quality, increased security of energy supply, new jobs and a reduced threat of climate change, which a U.S. Pentagon report has identified as a security threat.

Recent surges in gasoline prices have reminded motorists of another kind of insecurity that is inherent in our heavy dependence on fossil fuels. Those fuels, which continue to benefit from an array of government subsidies, also carry a range of hidden costs in the form of damage to human health and natural ecosystems.

Around the world, a growing number of nations have recognized the economic and environmental benefits of renewable energy, and are enacting tax breaks and other policy measures to partially offset the advantages enjoyed by fossil fuels. Among the nations where policy changes may allow dynamic new renewable energy markets to emerge in the next five years are Brazil, China and India.

In another sign of coming change, nearly 90 nations have formally committed to increasing
their share of energy derived from renewable resources by joining the Johannesburg Renewable Energy Coalition, which rose out of the energy debate at the World Summit in 2002. Additionally, 165 individual commitments by governments, international agencies and private groups to promote the use of renewable energy—many of which represent important new initiatives—were announced at the Bonn conference.

According to Sawin, the last decade of rapid policy development has provided a blueprint for a portfolio of integrated policies with the proven ability to get renewable energy off the ground, allowing new dynamic markets to emerge. The greatest growth in renewables has occurred in a handful of countries—Germany, Japan, Denmark and Spain—and a number of U.S. states including Pennsylvania, Minnesota, Texas and California. Among the key elements of a strong renewable energy policy the report points to:

*Access to the market must be ensured. Governments must provide renewables with ready access to energy grids at prices that reflect full costs of conventional energy and provide sufficient incentive to stimulate renewable energy market growth.

* Financial incentives (including tax credits, rebates, payments and low-interest loans) are also important for encouraging investment in renewables by reducing investors’ risk and compensating for high capital costs.

* Education and information dissemination are essential for informing potential leaders, investors and customers about the potential of renewables, the state of technologies, and available government incentives, as well as to dispel myths.

* Public participation and ownership in the renewables development process increase political support and the likelihood of success.

* Clear industry standards and siting regulations help prevent inferior hardware from entering the marketplace, thereby increasing investor and customer confidence while addressing potential sources of opposition such as noise and visual impacts.

“Policies must be sustained and consistent to avoid boom-and-bust cycles that shake investor confidence and inhibit the development of strong domestic industries,” Sawin concludes. “Those countries that stay the course will end up not only with a more efficient and cleaner energy system, but will reap economic rewards in the form of new industries and jobs.”

TOP 10 UTILITY GREEN PRICING PROGRAMS

The National Renewable Energy Laboratory has compiled extensive data on utility green pricing programs and produced a number of “Top 10” lists of program characteristics and results. Below are two: one detailing total sales of renewable energy to program participants, and a second that recaps total number of customer participants.

GREEN PRICING PROGRAM RENEWABLE ENERGY SALES (as of December 2003) Rank Utility Resources Used Sales (kWh/year) Sales (avg.MW) 1 2 Austin Energy Portland General Electric Wind, landfill gas Wind, geothermal 289,038,019   188,646,290 33.0 21.5 3 4 Sacramento Municipal Utility District PacifiCorp Landfill gas, wind, hydro Wind, geothermal 143,160,698 132,168,603 16.3 15.1 5 6 Xcel Energy Los Angeles Department of Power & Water Wind Small hydro, landfill gas, solar 123,700,000 87,845,342 14.1 10.0 7 8 Tennessee Valley Authority We Energies Biogas, wind, solar Landfill gas, wind, hydro 40,491,000 34,648,566 4.6 4.0 9 10 AlliantEnergy Puget Sound Energy Wind, landfill gas Wind, solar 27,958,473 27,312,900 3.2 3.1

TOTAL NUMBER OF CUSTOMER PARTICIPANTS
(as of December 2003)