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Renewable Energy Conundrum

Jul 1, 2009 12:00 PM, By Michael Eby, Editor-in-Chief

Editor’s views on the current state of the renewable energy market, including the debate on whether or not to support government assistance or rally against it

Every time I really start to believe we've finally reached the tipping point for widespread adoption of renewable energy resources in this country, something happens to bring this intriguing market segment back in check. This time, the stagnant global economy is to blame.

Since the beginning of the year, you wouldn't believe how many renewable energy-related press releases, market reports, and new product announcements have crossed my desk. The Department of Energy (DOE) seems to issue a renewable energy press announcement on a daily basis. Solar manufacturers and research firms unveil new technology breakthroughs almost as often. And the wind power industry has made significant strides recently, accounting for 40% of the nation's new generating capacity in 2008. The sheer volume of news in this arena gives me hope that we, as a country, have finally accepted the fact that we must become smarter with the way in which we produce energy. But this lingering recession is taking its toll on this niche and dashing my hopes again. Following are just a few examples of the obstacles and opportunities that lie ahead.

Highlights from the American Institute of Architects (AIA) semi-annual “Consensus Construction Forecast” reveal that nonresidential construction spending will decrease by 16% in 2009 and another 12% in 2010. Couple this with the still stagnant residential market, and you can see there won't be much capacity growth to worry about in the short term. But despite the consistently poor construction outlook across the board, renewable energy players continue to push for change and rely on government assistance to keep projects moving.

On July 9, the Department of Treasury and the DOE announced that an estimated $3 billion will be made available for the development of renewable energy projects. This stimulus money will provide direct payments in lieu of tax credits. As you might expect, the announcement was well received by both the solar and wind industries.

“Financing for commercial solar installations, including utility-scale solar plants, has been impaired by great uncertainty in financial markets and anticipation of stimulus provisions like the grant program,” says Rhone Resch, president of the Solar Energy Industries Association (SEIA) in a recent SEIA press release. “Once [the Department of] Treasury begins accepting grant applications, the solar industry will create tens of thousands of jobs and spur investment in the clean energy economy.”

Denise Bode, CEO of the American Wind Energy Association (AWEA), shares a similar view. “We believe these grants will help get our companies back on track, create more jobs, and balance our electricity portfolio with clean, renewable energy,” she says. “The implementation of this program will be a welcome boost, just when we all need it.”

When I read about these new developments, I admit I have mixed feelings. On the one hand, I think enough is enough. The country is already in serious debt, having topped the $1 trillion mark for the first time in history. Our government cannot continue to fund every program under the sun and escape runaway inflation on the other side. On the other hand, I don't want to see all of the progress made in the renewable arena come to a screeching halt.

Because I, like many Americans, view our natural and renewable energy resources much differently today than in the past, I find myself in somewhat of a renewable energy conundrum. Do I continue to support government assistance or rally against it? At this point, I'm still sitting on the fence. Maybe your thoughts on the situation can help sway me one way or another. Shoot me an e-mail and give me your best shot. I'm always willing to listen.

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