Renewable energy realities in the united states final

RENEWABLE ENERGY REALITIES IN
THE UNITED STATES - 2012

WHAT WILL THE FUTURE HOLD FOR
2012
 With 2012 an election year in America, it is likely that little will
happen on the federal policy front in 2012.
 Focus will shift to the states as industry observers set their sights
on local and state legislation that will be favorable to renewals.
 During the first quarter of 2011, energy produced from renewable
sources, - 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 renewable
generation expiring as enacted. If those subsidies were to be
extended, a larger increase in renewable generation would be
expected according to the US Energy Information Administration.

KEY FEDERAL INCENTIVES FOR
RENEWABLE ENERGY PROJECTS
 1603 Grant in Lieu of Tax Credit
 Production Tax Credit (PTC)
 Investment Tax Credits (ITC)

1603 Grant in Lieu of Tax Credit.
 The grant has been very beneficial to the industry.
It has allowed for the development of community
wind farms, a biomass power plant and solar
installations in areas they would never have
happened.
 With the grant set to expire at the end of 2011,
many are wondering how the industry will fare
without it.
 The Solar Energy Industries has said that extending
the grant would allow for the creation of some
37,000 jobs in 2012 in the Solar sector.

Production Tax Credit (PTC)
 The PTC is scheduled to expire at the end of 2012 for wind
power.
 At the end of 2013 for hydropower, biomass and
geothermal energy
 In 2016 for Solar Power
While projects will continue to go forward into the first half of
2012, many experts believe that the second half could see a
downward trend as developers wait to see if the PTC will be
extended for wind, biomass, hydro and geothermal.

Investment 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 and
combined heat and power systems which include biomass
The ITC is low risk and creates a more sustainable long- term
market. As system prices fall, so does the bill to the government
which does not have to intervene because the ITC adjusts to the
systems costs.
Renewable energy financiers agree that 2012 will be a tough one
for renewables if the Federal Incentives are not extended.

STATE INCENTIVES AND POLICIES FOR
 Due to the uncertain political climate, the
focus may change from federal to state
incentives.
 Most of the 50 States have Financial
Incentive programs and Rules,
Regulations and Policies of varying kinds.
 For the purposes of this talk, I will focus
on the Renewable Energy Portfolio
Standard (REPS) policy.

Renewable Portfolio Standards (REPS): An
Effective Policy to Support Clean Energy Supply
 The goal of REPS is to stimulate the market and
technology development so that, ultimately,
renewable energy will be economically
competitive with conventional forms of electric
power.
 A Renewable Energy Portfolio Standard (REPS)
requires electricity providers to obtain a minimum
percentage - 8% in Pennsylvania to 33% in
California - of their power from renewable energy
resources by a certain date.

Renewable Portfolio Standards (REPS):
An Effective Policy to Support Clean
Energy Supply
 Most of these standards phase in over years, and
the date refers to when the full requirement takes
effect - 2013 in New York State to 2030 in
California.
 Currently there are 24 states plus the District of
Columbia that have REPS policies in place.

What Are the Benefits of a Renewable Portfolio Standard?
 Environmental improvement (e.g. air pollution, global
climate 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

What Are the Benefits of a Renewable Portfolio Standard?
 Achieves policy objectives efficiently and at a relatively
modest cost (ratepayer impacts range from less than 1
percent 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 state
electricity markets
 Provides a clear and long-term target for renewable energy
generation that can increase investors and developers
confidence in the prospects for renewable energy

INDUSTRY “SNAPSHOT”
Solar Outlook 2012: The Race to Go Mainstream
 The solar industry will continue to be driven by
large scale rooftop and ground-mounted
developments.
 New and unique ways of making solar panels
more efficient in power generation are coming to
light every day.
 High quality solar panels at 80cents per watt will
take the many markets closer to grid parity.

Solar Outlook 2012: The Race to Go
Mainstream
The solar industry is also working to get
much closer to the consumer - from
computers to electric vehicles.
Some products where solar can make inroads
both from a consumer and a marketing
perspective in 2012 and beyond are…

In your Bag/Briefcase
 Samsung’s solar powered net book that needs two hours of sunlight
for one hour of battery life
 Solar cell phone chargers, lanterns, torches, table fans, ovens
The current market for these devices is located in places that are not
yet on the grid – like rural India – but it is only a matter of time
before solar becomes fully integrated in laptops and cell
phones in the US, and when that happens, solar will come
down from the roof and into our purses.

Big, 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 system
that will combine hot water and electricity at it new corporate HQ
in Northern California
These three companies are the platforms by which we communicate
and to have them leading the corporate charge towards renewable
like solar could have vast implications for next year and beyond.

In the Garage
There are a growing number of solar companies that are partnering
with carmakers to provide solar-powered charging stations both at
work and in the garage:
 Sun Power has forged an alliance with Ford that will use a 2.5 KW
rooftop array to charge the new Ford Focus electric car that will
hit the streets in 2012.
 Sun Edison has joined the Pecan Street smart grid demonstration
project in Austin Texas where it will lead the development of
home PV charging stations for the Chevy Volt.

In your Home and On your Roof
 Recently, 3M introduced a solar film for windows that
makes them shatterproof and generates electricity, albeit
at a much lower efficiency than traditional panels.
 Dow Corning has introduced a rooftop shingle that blends
well with traditional shingles and goes up with minimal
installation via an old fashioned hammer and nail.

Geothermal: Not Yet Prime Time in the USA
 Domestic development of geothermal not yet strong enough to foster
serious development activity in the USA.
 Geothermal has a strong international market involving many US
companies:
 ThermaSources is involved in consulting and drilling in South
America and the Caribbean
 Power Engineers has among its ventures, engineering services for
two plants in Turkey – the 60MW Kizildere resources study and
the 40-MW Germancik project
 Geothermal Development Associates is currently facilitating the
design and supply of the Eburu Wellhead Geothermal Power Plant
under contract with Kenya Electricity Generating Company

Biomass Industry – Cautiously Optimistic
o The long awaited construction of four major biomass
plants will make 2012 pivotal in the expansion of
wood-fired power industry.
o Three coal to biomass plant conversions awaiting
permits in Virginia could also set the stage for a
boom in local use of pelletized fuel.
o Dominion Virginia Power is awaiting permits to
convert three peaking coal plants to operate on
wood pellets to help the Commonwealth of Virginia
meet a 15% RPS by 2025.

Wood Pellet Growth in the US
 The US is currently second in the world for wood pellet
production.
 Projects like Dominion Virginia Power’s could lead to a
boom in wood pellet manufacturing in 2012.
 Envira, a leading exporter of North American wood
pellets to European Utilities signed a deal to supply two
of Dominion Virginia Power’s 50-MW converted coal
plants with wood pellets.
 Envira expects to increase pellet manufacturing to
750,000 metric tons before the end of 2012.

Policy and Regulatory Uncertainty
 EPA’s Greenhouse Gas Tailoring Rule would require
biomass power plants by 2014 to meet the same
greenhouse gas permits required for coal-fired plants.
 The industry also hopes for a reprieve from EPA’s
proposed regulations on carbon dioxide and particulate
emissions before the start of 2012.
 Further causing uncertainty for the industry is the
looming 2013 expiration of the federal Production Tax
Credit for biomass power.

On-Shore Wind Energy
 Wind power has made up 35% of all new
generating capacity added to the US grid since
2007. That is twice what coal and nuclear
combined have added in the last five years.
 As of the end of third quarter of 2011, 8,400
megawatts of wind power capacity are under
construction in the US and installed wind power
capacity stands at 2,360 MW.

On-Shore Wind Energy Long-Term Future: Foggy
 2012 will be a year of thousands of wind power MW being
added to the US electric grid thanks to the 1603 Treasury
Grant Program which jump started many wind projects by
2011.
 While Section 1603 will likely expire at end of 2011, the
federal Renewable Energy Production Tax Credit (PTC) will
be a draw for wind developers starting construction in
2012.
 The PTC is set to expire on December 31, 2012.
 Post 2012, Wind development will have a question mark
over them due to the lack of long-term federal policy.

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 electricity
but only six of these states could meet even one fifth of their
power demand with land-based wind energy. This leaves a clean
energy void that could be filled by offshore wind power.
 Offshore wind is an emerging North American technology so start
up costs are higher than on-shore developments.
 Considering the unstable global financial environmental scene and
the likely removal of federal grants for renewables, 2012 may not
be the right time to plan offshore wind projects.

Offshore Wind – An Era of Research
 Although offshore wind projects may not be moving forward
quickly, offshore wind research is taking off.
 Early in 2011, the Interior and Energy departments
announced:
 $50.5 million in funding opportunities for projects that support
offshore wind energy deployment
 Additional million dollar grants to research institutions to support
the development of 6-MW offshore wind turbines
 It is likely that 2012 will be a time for permits and additional
research.

ADOPTION OF RENEWABLE
ENERGY
ERNST & YOUNG SURVEY, 2010
Key Adopters
 Consumers - Companies
 Suppliers – Utilities
Key Drivers
 Public
 Government

ADOPTION OF RENEWABLE ENERGY
Survey Summary
 Renewable energy’s lack of competitiveness in comparison to
fossil fuels can be largely attributed to the fact that the existing
energy infrastructure is geared towards fossil fuels.
 Renewable Energy not a high priority for most companies.
 At a national level, government regulations, the reliability of
supply and grid connectivity stand in the way.
 The consensus is that lowering infrastructure and cost barriers
of Renewable Energies will come through government
intervention– tax incentives, federal grants, stricter regulatory
requirements and taxes on carbon emissions to “push” demand.

Barriers 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 a
significant barrier to increasing the supply of renewables
 Lack of supply of Renewable Energy sources.
 Lack of knowledge about the procedure or true cost of
switching to renewable energy sources.
 Lack of government incentives.

Barriers 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 renewable
energy sources)
 Lack of Grid connectivity (e.g., transmission capacity)
 Uncertain Market forces (e.g., lack of predictability of
future consumer demand). 29% of US suppliers say
they are not sure the current popular focus on
renewable will translate into long-term demand

CONSUMER ADOPTION OF RENEWABLE
ENERGY– 2010
ERNST & YOUNG SURVEY
Barriers to Adoption for Energy Suppliers
 Cost of renewable energy unattractive to customers
 Margins on Renewable Energy are lower than for
traditional energy sources
 Investments in renewable infrastructure are too
expensive
 Technical issues (e.g., technology immaturity, lack of
manufacturing capacity)

ENERGY– 2010
Drivers to Adoption for Renewable Energies
 The public perception is a significant driver
for energy suppliers, pressuring them to
commit to incorporating Renewable Energy
into their energy portfolios.
 The public perception is also a driver to
energy consumers to reduce carbon
footprint.

ENERGY– 2010
Drivers to Adoption of Renewable Energies
 Government spending on Renewable
Energy infrastructure (e.g., new
transmission capacity)
 Regulatory devices like airtight Renewable
Portfolio Standards
 Incentives such as tax credits and
investments in the right infrastructure

US National Energy Policy
Comprehensive, not Piecemeal, Proactive, not Reactive
 A comprehensive, long term energy policy would help balance the
security and reliability of the nation’s current energy resources with
the 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 fuel
mix.
 It would also remove the barriers that are holding back the
development of a more robust grid to bring this cleaner, more
efficient energy to our homes and businesses.
 Finally, it would provide the certainty that we all need to invest in
the future – creating jobs and propelling the US economy forward

Renewable energy realities in the united states final

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