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 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.

KEY FEDERAL INCENTIVES FOR

RENEWABLE ENERGY PROJECTS

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 governmentwhich does not have to intervene because the ITC adjusts to the systems costs.

Renewable energy financiers agree that 2012 will be a tough onefor renewables if the Federal Incentives are not extended.

STATE INCENTIVES AND POLICIES FOR RENEWABLE ENERGY PROJECTS

Due to the uncertain political climate, thefocus 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): AnEffective 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 CleanEnergy 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 GoMainstream

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…


Solar Outlook 2012: The Race to Go Mainstream

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.

INDUSTRY “SNAPSHOT”Solar Outlook 2012: The Race to Go Mainstream

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 partneringwith 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 ERNST & YOUNG SURVEY, 2010

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)



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.



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

Education

renewable energy financiers

clean energy

solar energy industries

biomass andgeothermal

us energy production

security of energy supply

state incentives

renewable generation