1. RENEWABLE ENERGY REALITIES INTHE UNITED STATES - 2012
2. WHAT WILL THE FUTURE HOLD FOR2012 With 2012 an election year in America, it is likely that little willhappen on the federal policy front in 2012. Focus will shift to the states as industry observers set their sightson local and state legislation that will be favorable to renewals. During the first quarter of 2011, energy produced from renewablesources, - biomass, geothermal, solar, hydro and wind power -generated 11.73% of US energy production. Projections for 2035 for Renewable Energy are around 15%. This forecast is based on US federal subsidies for renewablegeneration expiring as enacted. If those subsidies were to beextended, a larger increase in renewable generation would beexpected according to the US Energy Information Administration.
3. KEY FEDERAL INCENTIVES FORRENEWABLE ENERGY PROJECTS 1603 Grant in Lieu of Tax Credit Production Tax Credit (PTC) Investment Tax Credits (ITC)
4. KEY FEDERAL INCENTIVES FORRENEWABLE ENERGY PROJECTS1603 Grant in Lieu of Tax Credit. The grant has been very beneficial to the industry.It has allowed for the development of communitywind farms, a biomass power plant and solarinstallations in areas they would never havehappened. With the grant set to expire at the end of 2011,many are wondering how the industry will farewithout it. The Solar Energy Industries has said that extendingthe grant would allow for the creation of some37,000 jobs in 2012 in the Solar sector.
5. KEY FEDERAL INCENTIVES FORRENEWABLE ENERGY PROJECTSProduction Tax Credit (PTC) The PTC is scheduled to expire at the end of 2012 for windpower. At the end of 2013 for hydropower, biomass andgeothermal energy In 2016 for Solar PowerWhile projects will continue to go forward into the first half of2012, many experts believe that the second half could see adownward trend as developers wait to see if the PTC will beextended for wind, biomass, hydro and geothermal.
6. KEY FEDERAL INCENTIVES FORRENEWABLE ENERGY PROJECTSInvestment Tax Credits (ITC).These credits are in place until 2016 and available at: 30% for solar, small wind and fuel cells 10% for geothermal systems, micro hydropower turbines andcombined heat and power systems which include biomassThe ITC is low risk and creates a more sustainable long- termmarket. As system prices fall, so does the bill to the governmentwhich does not have to intervene because the ITC adjusts to thesystems costs.Renewable energy financiers agree that 2012 will be a tough onefor renewables if the Federal Incentives are not extended.
7. STATE INCENTIVES AND POLICIES FORRENEWABLE ENERGY PROJECTS Due to the uncertain political climate, thefocus may change from federal to stateincentives. Most of the 50 States have FinancialIncentive programs and Rules,Regulations and Policies of varying kinds. For the purposes of this talk, I will focuson the Renewable Energy PortfolioStandard (REPS) policy.
8. STATE INCENTIVES AND POLICIES FORRENEWABLE ENERGY PROJECTSRenewable Portfolio Standards (REPS): AnEffective Policy to Support Clean Energy Supply The goal of REPS is to stimulate the market andtechnology development so that, ultimately,renewable energy will be economicallycompetitive with conventional forms of electricpower. A Renewable Energy Portfolio Standard (REPS)requires electricity providers to obtain a minimumpercentage - 8% in Pennsylvania to 33% inCalifornia - of their power from renewable energyresources by a certain date.
9. STATE INCENTIVES AND POLICIES FORRENEWABLE ENERGY PROJECTSRenewable Portfolio Standards (REPS):An Effective Policy to Support CleanEnergy Supply Most of these standards phase in over years, andthe date refers to when the full requirement takeseffect - 2013 in New York State to 2030 inCalifornia. Currently there are 24 states plus the District ofColumbia that have REPS policies in place.
10. STATE INCENTIVES AND POLICIES FORRENEWABLE ENERGY PROJECTSWhat Are the Benefits of a Renewable Portfolio Standard? Environmental improvement (e.g. air pollution, globalclimate change mitigation) Increased diversity and security of energy supply. Lower natural gas prices due to displacement of some gas-fired generation Reduced volatility of power prices, given stable or non-existent fuel costs for renewable. Local economic development resulting from new jobs,taxes, and revenue associated with new renewable capacity
11. STATE INCENTIVES AND POLICIES FORRENEWABLE ENERGY PROJECTSWhat Are the Benefits of a Renewable Portfolio Standard? Achieves policy objectives efficiently and at a relativelymodest cost (ratepayer impacts range from less than 1percent increases to 0.5 percent savings) Spreads compliance costs among all customers Minimizes the need for ongoing government intervention Functions in both regulated and unregulated stateelectricity markets Provides a clear and long-term target for renewable energygeneration that can increase investors and developersconfidence in the prospects for renewable energy
12. INDUSTRY “SNAPSHOT”Solar Outlook 2012: The Race to Go Mainstream The solar industry will continue to be driven bylarge scale rooftop and ground-mounteddevelopments. New and unique ways of making solar panelsmore efficient in power generation are coming tolight every day. High quality solar panels at 80cents per watt willtake the many markets closer to grid parity.
13. INDUSTRY “SNAPSHOT”Solar Outlook 2012: The Race to GoMainstreamThe solar industry is also working to getmuch closer to the consumer - fromcomputers to electric vehicles.Some products where solar can make inroadsboth from a consumer and a marketingperspective in 2012 and beyond are…
14. INDUSTRY “SNAPSHOT”Solar Outlook 2012: The Race to Go MainstreamIn your Bag/Briefcase Samsung’s solar powered net book that needs two hours of sunlightfor one hour of battery life Solar cell phone chargers, lanterns, torches, table fans, ovensThe current market for these devices is located in places that are notyet on the grid – like rural India – but it is only a matter of timebefore solar becomes fully integrated in laptops and cellphones in the US, and when that happens, solar will comedown from the roof and into our purses.
15. INDUSTRY “SNAPSHOT”Solar Outlook 2012: The Race to Go MainstreamBig, Iconic Companies are Turning to Solar Solutions Apple decided to use solar to power a massive data center in NC Google invested heavily in rooftop solar financing Facebook announced it would install a solar co-generation systemthat will combine hot water and electricity at it new corporate HQin Northern CaliforniaThese three companies are the platforms by which we communicateand to have them leading the corporate charge towards renewablelike solar could have vast implications for next year and beyond.
16. INDUSTRY “SNAPSHOT”Solar Outlook 2012: The Race to Go MainstreamIn the GarageThere are a growing number of solar companies that are partneringwith carmakers to provide solar-powered charging stations both atwork and in the garage: Sun Power has forged an alliance with Ford that will use a 2.5 KWrooftop array to charge the new Ford Focus electric car that willhit the streets in 2012. Sun Edison has joined the Pecan Street smart grid demonstrationproject in Austin Texas where it will lead the development ofhome PV charging stations for the Chevy Volt.
17. INDUSTRY “SNAPSHOT”Solar Outlook 2012: The Race to Go MainstreamIn your Home and On your Roof Recently, 3M introduced a solar film for windows thatmakes them shatterproof and generates electricity, albeitat a much lower efficiency than traditional panels. Dow Corning has introduced a rooftop shingle that blendswell with traditional shingles and goes up with minimalinstallation via an old fashioned hammer and nail.
18. INDUSTRY “SNAPSHOT”Geothermal: Not Yet Prime Time in the USA Domestic development of geothermal not yet strong enough to fosterserious development activity in the USA. Geothermal has a strong international market involving many UScompanies: ThermaSources is involved in consulting and drilling in SouthAmerica and the Caribbean Power Engineers has among its ventures, engineering services fortwo plants in Turkey – the 60MW Kizildere resources study andthe 40-MW Germancik project Geothermal Development Associates is currently facilitating thedesign and supply of the Eburu Wellhead Geothermal Power Plantunder contract with Kenya Electricity Generating Company
19. INDUSTRY “SNAPSHOT”Biomass Industry – Cautiously Optimistico The long awaited construction of four major biomassplants will make 2012 pivotal in the expansion ofwood-fired power industry.o Three coal to biomass plant conversions awaitingpermits in Virginia could also set the stage for aboom in local use of pelletized fuel.o Dominion Virginia Power is awaiting permits toconvert three peaking coal plants to operate onwood pellets to help the Commonwealth of Virginiameet a 15% RPS by 2025.
20. INDUSTRY “SNAPSHOT”Biomass Industry – Cautiously OptimisticWood Pellet Growth in the US The US is currently second in the world for wood pelletproduction. Projects like Dominion Virginia Power’s could lead to aboom in wood pellet manufacturing in 2012. Envira, a leading exporter of North American woodpellets to European Utilities signed a deal to supply twoof Dominion Virginia Power’s 50-MW converted coalplants with wood pellets. Envira expects to increase pellet manufacturing to750,000 metric tons before the end of 2012.
21. INDUSTRY “SNAPSHOT”Biomass Industry – Cautiously OptimisticPolicy and Regulatory Uncertainty EPA’s Greenhouse Gas Tailoring Rule would requirebiomass power plants by 2014 to meet the samegreenhouse gas permits required for coal-fired plants. The industry also hopes for a reprieve from EPA’sproposed regulations on carbon dioxide and particulateemissions before the start of 2012. Further causing uncertainty for the industry is thelooming 2013 expiration of the federal Production TaxCredit for biomass power.
22. INDUSTRY “SNAPSHOT”On-Shore Wind Energy Wind power has made up 35% of all newgenerating capacity added to the US grid since2007. That is twice what coal and nuclearcombined have added in the last five years. As of the end of third quarter of 2011, 8,400megawatts of wind power capacity are underconstruction in the US and installed wind powercapacity stands at 2,360 MW.
23. INDUSTRY “SNAPSHOT”On-Shore Wind Energy Long-Term Future: Foggy 2012 will be a year of thousands of wind power MW beingadded to the US electric grid thanks to the 1603 TreasuryGrant Program which jump started many wind projects by2011. While Section 1603 will likely expire at end of 2011, thefederal Renewable Energy Production Tax Credit (PTC) willbe a draw for wind developers starting construction in2012. The PTC is set to expire on December 31, 2012. Post 2012, Wind development will have a question markover them due to the lack of long-term federal policy.
24. INDUSTRY “SNAPSHOT”Offshore Wind – An Era of Research The potential value of offshore wind in the US is sizable. The 30 US Coastal states consume 78% of the nation’s electricitybut only six of these states could meet even one fifth of theirpower demand with land-based wind energy. This leaves a cleanenergy void that could be filled by offshore wind power. Offshore wind is an emerging North American technology so startup costs are higher than on-shore developments. Considering the unstable global financial environmental scene andthe likely removal of federal grants for renewables, 2012 may notbe the right time to plan offshore wind projects.
25. INDUSTRY “SNAPSHOT”Offshore Wind – An Era of Research Although offshore wind projects may not be moving forwardquickly, offshore wind research is taking off. Early in 2011, the Interior and Energy departmentsannounced: $50.5 million in funding opportunities for projects that supportoffshore wind energy deployment Additional million dollar grants to research institutions to supportthe development of 6-MW offshore wind turbines It is likely that 2012 will be a time for permits and additionalresearch.
26. ADOPTION OF RENEWABLEENERGYERNST & YOUNG SURVEY, 2010Key Adopters Consumers - Companies Suppliers – UtilitiesKey Drivers Public Government
27. ADOPTION OF RENEWABLE ENERGYERNST & YOUNG SURVEY, 2010Survey Summary Renewable energy’s lack of competitiveness in comparison tofossil fuels can be largely attributed to the fact that the existingenergy infrastructure is geared towards fossil fuels. Renewable Energy not a high priority for most companies. At a national level, government regulations, the reliability ofsupply and grid connectivity stand in the way. The consensus is that lowering infrastructure and cost barriersof Renewable Energies will come through governmentintervention– tax incentives, federal grants, stricter regulatoryrequirements and taxes on carbon emissions to “push” demand.
28. ADOPTION OF RENEWABLE ENERGYERNST & YOUNG SURVEY, 2010Barriers to Adoption for Energy Consumers Cost is a leading barrier to adoption by energy consumers Too expensive relative to fossil fuels Large expense of investing in renewable energy infrastructure asignificant barrier to increasing the supply of renewables Lack of supply of Renewable Energy sources. Lack of knowledge about the procedure or true cost ofswitching to renewable energy sources. Lack of government incentives.
29. ADOPTION OF RENEWABLE ENERGYERNST & YOUNG SURVEY, 2010Barriers to Adoption for Energy Suppliers Regulations (e.g., lack of clarity as to incentives,pricing structure, renewable energy targets) Reliability (e.g., intermittent nature of renewableenergy sources) Lack of Grid connectivity (e.g., transmission capacity) Uncertain Market forces (e.g., lack of predictability offuture consumer demand). 29% of US suppliers saythey are not sure the current popular focus onrenewable will translate into long-term demand
30. CONSUMER ADOPTION OF RENEWABLEENERGY– 2010ERNST & YOUNG SURVEYBarriers to Adoption for Energy Suppliers Cost of renewable energy unattractive to customers Margins on Renewable Energy are lower than fortraditional energy sources Investments in renewable infrastructure are tooexpensive Technical issues (e.g., technology immaturity, lack ofmanufacturing capacity)
31. CONSUMER ADOPTION OF RENEWABLEENERGY– 2010ERNST & YOUNG SURVEYDrivers to Adoption for Renewable Energies The public perception is a significant driverfor energy suppliers, pressuring them tocommit to incorporating Renewable Energyinto their energy portfolios. The public perception is also a driver toenergy consumers to reduce carbonfootprint.
32. CONSUMER ADOPTION OF RENEWABLEENERGY– 2010ERNST & YOUNG SURVEYDrivers to Adoption of Renewable Energies Government spending on RenewableEnergy infrastructure (e.g., newtransmission capacity) Regulatory devices like airtight RenewablePortfolio Standards Incentives such as tax credits andinvestments in the right infrastructure
33. US National Energy PolicyComprehensive, not Piecemeal, Proactive, not Reactive A comprehensive, long term energy policy would help balance thesecurity and reliability of the nation’s current energy resources withthe integration and capabilities of newer, cleaner technologies. It would also transform the way the US produces and uses energy,making the system more efficient and further diversifying the fuelmix. It would also remove the barriers that are holding back thedevelopment of a more robust grid to bring this cleaner, moreefficient energy to our homes and businesses. Finally, it would provide the certainty that we all need to invest inthe future – creating jobs and propelling the US economy forward