Energy
3:48 am
Sun December 23, 2012

Forget Fracking: 2012 Was A Powerful Year For Renewables

Originally published on Mon January 7, 2013 8:44 am

Natural gas may have reshaped the domestic energy market in 2012, lowering energy prices and marginalizing the coal industry, but America's shale boom hasn't undermined renewables.

In fact, while analysts were paying attention to fracking this year, a record number of solar panels were being slapped on roofs — enough to produce 3.2 gigawatts of electricity.

That sounds like a lot, but solar is still providing just .05 percent of the country's total energy. Still, the solar industry keeps expanding. Rhone Resch, who heads the Solar Energy Industries Association, said that's because solar panels are becoming cheaper to make and to install.

"Just to give you perspective," Resch said, "in Washington, D.C., where I live, when I installed solar on my house six years ago, the average install cost was about $14 a watt. Today it's about $4 a watt."

So if you're installing solar panels, business is good. But there's a flip side to that equation. Prices are low because of a global manufacturing glut. Solar manufacturers have the capacity to produce way more panels than consumers are asking for right now, and many panel producers are struggling.

The bulk of solar growth is happening at businesses; companies are installing panels on roofs so that they don't have to buy as much energy from the grid. State and federal policies are making that an easy decision for companies. Businesses who install panels can qualify for grants and tax breaks, and laws in 38 states require a certain amount of electricity to be generated by solar, wind and other renewable sources.

A Good Year For Wind Power, Too

Wind was up this year, too. The federal Energy Information Administration says the industry could add 1.2 gigawatts of capacity this year. Wind only provides a small portion of domestic power, about 3 percent.

Wind is on a strong streak with consumers as well, says Rob Gramlich, a vice president at the American Wind Energy Association. "Where we were serving the equivalent of 6 million homes at the end of 2008, we're serving 13 million today," he says.

In three of the last five years, wind has been the fastest-growing energy sector. That was the case in 2012, but this year's totals leave a bit of a false impression. There's been a flurry of activity in December, and in fact more than half of new wind farms will likely come online this month.

"The single-most reason for that is the tax support system which we all rely upon is expiring at year-end," explains Jim Spencer, the president and CEO of New York-based EverPower, which runs wind farms in Pennsylvania, New York, Ohio and California. "We really accelerated projects that might otherwise have been built next year."

The 2013 Windbreaker

The program — called a production tax credit — expires on Dec. 31. It allows companies that get their wind farms running before then to claim a 2.2-cent tax break for every kilowatt hour of energy produced. That might not sound like a lot, but it keeps their business costs down by about 30 percent.

So wind power is about to get 30 percent more expensive for the utilities at a time when natural gas is very cheap. That's bad news, Gramlich says.

"Utilities are looking at those prices. And they simply won't buy nearly as much wind power without that credit," he says.

The tax credit could still pass, likely as part of the huge bills all the "fiscal cliff" agreements will be stuffed into. A last-minute extension, however, won't help for 2013.

"It's really a black hole next year," says EverPower's Spencer. "We have absolutely no construction plans for next year."

So wind will slow down next year, but no matter what happens with natural gas, you can still expect growth in renewables, due to those state laws pushing alternative energy.

States are doing that because climate change scientists around the world agree that if we don't find a replacement for fossil fuels, our goose is cooked.

Copyright 2014 NPR. To see more, visit http://www.npr.org/.

Transcript

RACHEL MARTIN, HOST:

So, booming gas, fading coal, what does it mean for renewables?

NPR's Scott Detrow reports.

SCOTT DETROW, BYLINE: There's no question the natural gas boom has hurt the coal industry, but it hasn't undermined renewables. In fact, while you were paying attention to fracking this year, a record number of solar panels were being slapped onto roofs. The Solar Energy Industries Association says enough solar panels were installed to produce 3.2 gigawatts of electricity.

It sounds like a lot but solar is only providing 0.05 percent of the country's energy. Still, solar power keeps expanding.

Roan Resch, who heads the group, says it's because solar panels are becoming cheaper, both to make and to install.

ROAN RESCH: So just to give you perspective, in Washington, D.C. where I live, when I installed solar on my house six years ago, the average install cost was about $14 a watt. Today it's about $4 a watt.

DETROW: Basically, if you're installing solar panels, business is good. And that's partly because prices are cheap due largely to a worldwide manufacturing supply glut. The bulk of solar growth is happening at businesses. Companies are installing panels on roofs so they don't have to buy as much energy from the grid. State and federal policies are making that an easy decision for companies. Businesses who install panels can qualify for grants and tax breaks.

And laws in 38 states require a certain amount of electricity to be generated by solar, wind and other renewable sources.

Wind was up this year too. The federal Energy Information Administration says the industry could add 1.2 gigawatts of capacity this year. Wind only provides a small portion of domestic power too, about 3 percent.

But it's on a strong streak, says Rob Gramlich, a vice president at the American Wind Energy Association.

ROB GRAMLICH: So where we were serving the equivalent of six million homes at the end of 2008, we're serving 13 million today.

DETROW: In three of the last five years, wind has been the fastest-growing energy sector. That was the case in 2012, but this year's totals leave a bit of a false impression. If you look at the numbers, you'll see a flurry of activity in December. More than half of new wind farms will likely come online this month.

JIM SPENCER: The single-most reason for that, I would say is that, you know, the tax support system which we all rely upon is expiring at yearend. We really accelerated projects that might otherwise have been built next year.

DETROW: Jim Spencer is the CEO for New-York based EverPower, which runs wind farms in Pennsylvania, New York, Ohio and California. The program, it's called a production tax credit, expires on December 31st. It allows companies that get their wind farms running before then to claim a 2.2 cent tax break for every kilowatt hour of energy produced.

Two point two cents may not sound like a lot, but it keeps their business costs down by about 30 percent. So wind power is about to get 30 percent more expensive for the utilities. And this is at a time when natural gas is very cheap.

Rob Gramlich, with the American Wind Energy Association, says it's bad news.

GRAMLICH: And utilities are looking at those prices. And they simply won't buy nearly as much wind power without that credit.

DETROW: The tax credit could still pass, likely as part one of the huge bills all the fiscal cliff agreements will be stuffed into. But a last-minute extension won't help for 2013.

SPENCER: It's really a black hole, Scott, next year.

DETROW: Jim Spencer of EverPower says most companies held off on new plans while they wait for word on the tax break. So...

SPENCER: We have absolutely no construction plans for next year.

DETROW: So wind will slow down next year, but you can still expect renewable growth no matter what happens with natural gas. There are those state laws pushing alternative energy. States are doing that because climate change scientists around the world agree that if we don't find a replacement for fossil fuels, our goose is cooked.

Scott Detrow, NPR News.

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(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.