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America's Energy Question: What Price Will it Take to Commit to Renewable Energy?

Nathanael Baker's picture
EnergyBoom Media Inc.

Nathanael Baker is the Managing Editor of EnergyBoom. He has been immersed in the areas of renewable energy and climate change for two years. Before joining EnergyBoom, Nathanael was the Director...

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  • Nov 9, 2010
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The economic recession has hit renewable energy industries in the United States hard, and the effects have been accentuated by the country’s lack of national energy policy.

Many renewable energy businesses have found it increasingly difficult to receive money from financial institutions since 2008.  Yet, even when the finances have been in order, these companies have seen their projects halted by regulatory bodies which deem the cost of their energy as an added expense to the already tight monthly budget for American consumers.

The New York Times reports that deals for utilities to purchase renewable energy have been delayed in states such as Virginia, Idaho, Kentucky, and Florida.  Michael Polsky, the owner of Invenergy, a wind farm company, says his contract to sell energy to a utility in Virginia was rejected by state regulators.  The regulators cited the recession in their decision, and stated that energy produced by natural gas was a cheaper and better option for ratepayers — wind power would have increased monthly bills by 0.2%.

The cost of producing renewable energy is still higher than fossil fuel production.  However, as the technology continues to improve and fossil fuels prices increase, analysts say the costs will become competitive.  Nevertheless, the United States has yet to commit whole-heartedly to clean energy. 

Paul Gipe, a member of the steering committee of the Alliance for Renewable Energy — an organization advocating energy policy reform — says lack of commitment comes from a nation-wide failure to confront the tough question:  “We have to ask ourselves, ‘Do we really want renewables?’ And if the answer is yes, then we’re going to have to pay for them.”

China and the European Union have each shown a willingness to pay for renewable energy.  The latest research from Ernst & Young states China has become the most attractive area for cleantech investment.  Meanwhile, governments across Europe have modified their energy policies to mandate renewable energy generation.  Even though some policies have been more effective than others, they are all working toward meeting the European Union’s target of generating 20% of its energy from renewable energy by 2020.

So far the United States has relied on individual states enacting their own renewable energy standards and federal government grants for renewable energy projects.  Even without a full-scale commitment from the federal government, renewable energy continues to grow in America — a statement of the industry’s robustness.

Fossil fuels are cheaper than renewable energy sources, and most likely will remain so for the near future.  Price, however, is more inclusive than just dollars and cents; it now must account for environmental cost and long-term sustainability.  The 21st century economy will have to reflect a more acute awareness of the environment as well as the accessiblity of vital resources, such as energy supply. 

This current recession will end, but the enduring American energy question is likely to remain:  what price will it take to commit to the new energy economy?

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Nathan Wilson's picture
Nathan Wilson on Nov 9, 2010

As Barry Brook has recently pointed out (http://theenergycollective.com/barrybrook/46752/electricity-costs-exhibits), our clean energy dollars go much futher when nuclear is included in the mix.  Nuclear’s high capacity factor also means that the cost difference becomes even more pronounced when the clean energy penetration is high. 

The higher cost of renewables also means that people are less willing to give up fossil fuels, if that is the only option presented.  Past history shows that rejection on nuclear power leads to more fossil fuel use, including coal. 

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