US adds 1.5 GW of wind, solar capacity in 4-mo 2015
May 26, 2015
May 26 (SeeNews) - The US installed 1.9 GW of new power generation capacity in the first four months of 2015, with wind and solar parks bringing over 1.5 GW of the total, the Federal Energy Regulatory Commission (FERC) said.
More specifically, the newly added wind capacity in the country amounted to 1,170 MW in January-April 2015, up from 633 MW a year before. The US now has 67,160 MW of wind parks, which represents 5.74% of its total operating power capacity.
Meanwhile, some 362 MW of solar power plants came on line in the first four months, which compares to 937 MW in the same period of 2014. The cumulative solar capacity in the country thus reached 12,260 MW.
In April alone, the US’ wind and solar capacity grew by 511 MW and 50 MW, respectively. According to FERC’s data, these were the only new power plants for the month, which means the US did not install any fossil fuel capacity.
The number-one source in terms of operating generating capacity remains natural gas with a total 494 GW, followed by coal with 321.7 GW. All renewables, including hydropower, represent about 200 GW.
Solar energy sector to reach $803 million by 2020 in the US
11 May 2015
Study highlights the growth of solar power in the United States GTM Research has released a new study, which was produced with the aid of SoliChamba Consulting, that predicts the growth of the photovoltaic sector in the United States. The country has become quite fond of solar energy, which is becoming a larger focus for utilities throughout the U.S. as an alternative to fossil-fuels. Solar projects are becoming more common and the value of the photovoltaic sector is on the rise, which is expected to have a significant economic impact.
Photovoltaic sector to reach $803 million by 2020
According to the study, distributed photovoltaic services, such as asset management and operations, are expected to reach $803 million in the U.S. by 2020. The study notes that growing competition is fueling advances in the solar energy market. As the market grows, financial, commercial, and administrative tasks are also growing, placing a greater need on skilled workers that can fill roles in these aspects of the solar energy industry. Photovoltaic technologies are also becoming more advanced, allowing solar energy systems to perform more efficiently and allowing solar projects to comply with regulations in the country.
Solar power is growing beyond the residential sector
Last year, distributed solar energy in the United States reached 8.5 gigawatts of capacity, with the market reaching a value of $154 million, according to GTM and SoliChamba reports. Solar power is becoming quite popular in the residential sector, where homeowners are looking for ways to acquire electricity without having sole reliance on conventional utilities. The majority of growth in the photovoltaic sector is not likely to occur in the residential sector, however, as large-scale projects are gaining support more quickly.
Obama administration pumps $32M into solar industry
05/26/15
The Department of Energy announced a $32 million funding program to support jobs and research in the solar energy sector on Tuesday.
Of that funding, $12 million will go toward projects to train solar technicians and provide information about solar power to “other professionals in related fields such as real estate, insurance, finance and fire and safety,” according to the Department of Energy. The funding will go toward the Obama administration's goal of training 75,000 new solar workers by 2020.
The department will also spend $15 million on projects to develop new concentrating solar power (CSP) collectors, which are the most costly component of a solar power system. At least seven projects will split the funding and research ways to bring down those costs in the future. The rest of the funding will go toward at least three projects to collect and share data on the solar industry, such as power production and financial information. The department said the approach will help increase “transparency and fair pricing” in the market.
The funding comes from an Energy Department program called the SunShot Initiative, which is designed to boost solar power in the United States. The program has funded more than 350 projects in the last four years.
“To ensure the continued growth of the U.S. solar industry and our clean energy economy, it is critical that we support workforce training programs that will give American workers the skills they need for well-paying jobs and also make sure American consumers have access to highly-trained, credentialed professionals when they choose solar to power their daily lives,” Deputy Energy Secretary Elizabeth Sherwood-Randall said in a statement.
Wind and Solar Provide 100% of New Generating Capacity in April
May 26, 2015
In what is becoming a frequent occurrence, if not predictable pattern, renewable energy sources once again dominate in the latest federal monthly update on new electrical generating capacity brought into service in the U.S.
According to the recently-released “Energy Infrastructure Update” report from the Federal Energy Regulatory Commission’s (FERC) Office of Energy Projects, wind and solar accounted for all new generating capacity placed in-service in April. For the month, two “units” of wind (the 300-megawatt (MW) Hereford-2 Wind Farm Project in Deaf Smith County, Texas and the 211-MW Mesquite Creek Wind Project in Dawson County, Texas) came on line in addition to six new units—totaling 50 MW—of solar. Further, wind, solar, geothermal and hydropower combined have provided 84.1 percent of the 1,900 MW of new U.S. electrical generating capacity placed into service during the first third of 2015. This includes 1,170 MW of wind (61.5 percent), 362 MW of solar (19.1 percent), 45 MW of geothermal steam (2.4 percent) and 21 MW of hydropower (1.1 percent). The balance (302 MW) was provided by five units of natural gas. FERC has reported no new capacity for the year-to-date from biomass sources nor any from coal, oil or nuclear power. The total contribution of geothermal, hydropower, solar and wind for the first four months of 2015 (1,598 MW) is similar to that for the same period in 2014 (1,611 MW—in addition to 116 MW of biomass). However, for the same period in 2014, natural gas added 1,518 MW of new capacity while coal and nuclear again provided none and oil just 1 MW. Renewable energy sources accounted for half of all new generating capacity added in 2014. Renewable energy sources now account for 17.05 percent of total installed operating generating capacity in the U.S.: water—8.55 percent, wind—5.74 percent, biomass—1.38 percent, solar—1.05 percent and geothermal steam—0.33 percent (for comparison, renewables were 13.71 percent of capacity in December 2010—the first month for which FERC issued an “Energy Infrastructure Update”). Renewable energy capacity is now greater than that of nuclear (9.14 percent) and oil (3.92 percent) combined. In fact, the installed capacity of wind power alone has now surpassed that of oil. In addition, total installed operating generating capacity from solar has now reached and surpassed the one-percent threshold—a ten-fold increase since December 2010.* “Members of Congress and state legislators proposing to curb support for renewable energy, such as Renewable Portfolio/Electricity Standards and the federal Production Tax Credit and Investment Tax Credit, are swimming against the tide,” noted Ken Bossong, executive director of the SUN DAY Campaign. “With renewable energy’s clear track record of success and the ever-worsening threat of climate change, now is not the time to pull back from these technologies but rather to greatly expand investments in them.” *Note that generating capacity is not the same as actual generation. Electrical production per MW of available capacity (i.e., capacity factor) for renewables is often lower than that for fossil fuels and nuclear power. According to the most recent data (i.e., as of February 2015) provided by the U.S. Energy Information Administration (EIA), actual net electrical generation from renewable energy sources now totals 13.4 percent of total U.S. electrical production; however, this figure almost certainly understates renewables’ actual contribution significantly because neither EIA nor FERC fully accounts for all electricity generated by distributed renewable energy sources (e.g., rooftop solar).
Solar fastest-growing U.S. power source since shale boom
27. MAY 2015
Figures from the EIA reveal that solar will grow by more than 30% over the next year, posting growth patterns not seen in U.S. since the shale boom.
Data from the U.S. Energy Information Administration (EIA) has revealed that solar energy is set to grow by more than 30% over the next year, generating an increase in capacity not seen since the last boom in shale gas.
Solar power capacity in the U.S. has increased 20-fold since 2008, boosted by both residential growth across a number of sun-friendly states, as well as a series of large-scale developments that have transformed the country’s PV landscape.
The giant Topaz array in California, coupled with the thousands of new solar customers added every month thanks to suppliers such as SolarCity, NRG Energy and Vivint Solar, have slowly transformed an energy landscape that was last shaken up by the shale gas boom a few years ago.
In April, Michael Blaha of Wood Mackenzie Ltd. told Bloomberg: “Solar is the new shale. Share has lowered cost and enable lower natural gas prices. Solar will lower costs for electricity.”
Solar’s input into the electrical grid is challenging hydro and conventional generators, even delivering negative power prices on sunny days, Bloomberg reports.
In 2014, solar capacity grew by 30%, reaching more than 20 GW cumulatively, and the Solar Energy Industries Association (SEIA) forecasts that figure to have doubled by the end of 2016. By that time, more than 7.6 million U.S. homes will be able to be powered by solar energy. In 2009, that figure stood at just 360,000.
However, solar’s overall share in the U.S. energy landscape stands at less than 1%, behind coal, natural gas, oil, nuclear and hydroelectric power. The EIA states that solar’s intermittent nature means that many grid operators have to keep conventional power plants on standby during cloudy days, but some public service commissions are overhauling their rate system in order to keep transmission owners profitable as more and more U.S. citizens begin producing their own power.
At the other extreme, the U.S.’s largest solar power parks are already caused waves across the power market, with the 550 MW Topaz plant – the world's largest – and the forthcoming 579 MW Solar Star Project set to inject vast amounts of solar power into their local grids, disrupting energy prices in the process.
On April 23, reports Bloomberg, spot wholesale prices at Southern California’s SP15 hub – an area that covers Los Angeles and San Diego – averaged minus $60.94/MWh between 8am and 6pm. By noon that day, solar power accounted for 23% of the power generation of the region. The negative price of energy meant that the sell paid the buyer to take the power, so as to be able to keep its generator running.
In addition to the Topaz and Solar Star plants, Apple is also investing $850 million into a nearby solar plant, being built with the assistance of U.S. thin film company, First Solar.
Structural growth market at early stage penetration. Residential solar is growing at 50%+ p.a., driven by relentlessly improving value proposition, strong sales and marketing, investment incentives and expanding financing options. Market leaders SCTY and VSLR have strong track records, excellent access to capital and solidly established business models. The federal investment tax credit reduction (30% to 10% at end-2016) should merely slow demand temporarily. "There's another $15 billion ready to go, as far as I'm concerned."
-- Warren Buffet, having disclosed that Berkshire Hathaway Energy has already invested $15 billion into solar and wind projects. (source)
Savvy investors are always looking for the next great growth story, the industries that transform economies and the companies that capitalize on these opportunities to define segments of commerce for generations to come. Think PCs with Microsoft and Intel. And the internet with Amazon and Google. Next up? Solar energy.
It is generally too early to pick the long term winners in solar, but it would be hard to go terribly wrong buying into the two market leaders, Solar City (NASDAQ:SCTY) and Vivint Solar (NYSE:VSLR). Both companies are essentially retail sales and marketing of equipment leases selling into target rich environments with well proven business models. Both have strong financing at a point in industry development when access to capital … especially tax equity … is a crucial competitive advantage. The industry's very strong growth and high ceiling gives management a lot of time to learn, adapt, and of course, make some mistakes along the way. We'll look much more closely at the two stocks in the weeks and months to come, including more definitive work "choosing" between them.
One stock we are not yet ready to buy is Real Goods Solar (NASDAQ:RGSE), which has struggled operationally and strategically to redefine its business model. There might be very good risk adjusted reward available in RGS in the coming quarters, but for the average Seeking Alpha reader, we just are not willing to go that speculative without a lot more careful homework. We'll do that homework, but it will take time. Fortunately, potential turnaround stories like RGSE rarely "run away", especially in the aftermath of a critical recapitalization. Tune in later.
Let's look at that industry growth …
In 2014, the US saw record solar photovoltaic installations … 6.2GW, up 30% YoY. Residential remains a key driver of that industry growth, up 51% in 2014, the third consecutive year of 50% + YoY growth.
US Solar PV Installations, 2000-14
Solid Secular Growth Drivers
I see three primary drivers behind current industry growth.
Improving value proposition … electricity costs are rising (around 3-6% p.a. in most locations), solar system costs are falling (est 9-12% p.a.). Effective sales and marketing … market leaders SCTY and VSLR have continuously refined their targeting strategies, product suites and deployment processes. Expanding financing options … consumer options like solar loans and PACE financing are rapidly expanding consumer options beyond the now well established solar lease/PPA.
Decline in tax incentives only temporary blip
The federal investment tax credit … 30% of system cost … is set to fall to 10% at the end of 2016, potentially undermining a key incremental growth driver. Setting aside (at least for now) the purely political question of whether the tax credit will be extended (I believe it will be extended, mostly because the industry is creating so many new high quality jobs), it is hard not to expect that a slowdown in demand will be temporary only. After all, gross (ex-ITC) system costs are now below net (inc-ITC) costs just a few years ago. For example, if electricity costs rise by 5% and PV system costs fall by 10% (both reasonable in many locations), the total value proposition of going solar completely replaced the federal tax credit in less than two years.
Secular growth, still at a very early stage
For investors, the most important factor here is purely financial: there is money to be made and value to be preserved. Solar is a growth industry with:
Low current penetration (but rising very fast), Very high potential penetration (rooftops, parking lots, empty fields …), Improving underlying economics (system prices falling 10%+ p.a.), and A product cycle based on long term technology improvements. The overall value proposition is steadily improving for solar customers, driving positive price elasticity and thus accreting significant value to shareholders. Moreover, has potential to drive crucial structural change across the entire economy. The solar industry is the leading jobs creator in the US right now (20% annual growth, roughly 20x the national average). More solar reduces long term dependence on extractive fuels … and hence, dependence on foreign energy sources. And perhaps the largest impact of all is the potential serious disruption by solar and other renewables of traditional utilities. This demands attention from any portfolio manager with a large core of so-called defensive utility stocks … widows and orphans beware.
Without doubt, renewable energy is on a roll. Denmark is producing 43% of its energy from renewables, and it aims for 70% by 2020. Germany, at more than 25% now and 30% soon, is going for 40% to 45% clean power by 2025, 55% to 60% by 2035, and an incredible 80% by 2050. China, despite many challenges, is the world’s leading source of renewable investment, as well as the largest solar manufacturer.
The United States, with about 13% renewable energy generation, has some catching up to do, though California (where some developers are incorporating solar into every house they build) points the way forward. The Solar Energy Industries Association reports that the solar market in the U.S. grew by 41% in 2013, and that it made up 20% of all new generating capacity in that year.
Both solar and wind are making strides. A global Bloomberg survey predicted that solar will grow more than 20% internationally in 2014 (as it did between 2012 and 2013). And the Global Wind Energy Council projects that 2014 will be a very good year internationally for wind as well, with dramatic increases over 2013 and at least 47 gigawatts of wind installed around the world.
Room for Growth
But all this positive movement could obscure the fact that renewable energy is still a very small part of the mix both in the U.S. and globally. The big percentage increases start from a small base (even with its rapid growth, solar is still less than 1% of generation in the U.S., and the official consensus is that the world will run on fossil fuel energy for the foreseeable future). The International Energy Agency’s “World Energy Outlook 2013” reports, “Today’s share of fossil fuels in the global mix, at 82%, is the same as it was 25 years ago; the strong rise of renewables only reduces this to around 75% in 2035.”
"Renewable electricity generation from technologies that are commercially available today, in combination with a more flexible electric system, is more than adequate to supply 80% of total U.S. electricity generation in 2050. –National Renewable Energy Lab"
Business as usual is also predicted for the U.S. The U.S. Energy Information Administration (EIA) does envision a gradual emissions reduction through energy-efficiency and the use of renewables. The agency said, “Improved efficiency of energy use in the residential and transportation sectors and a shift away from more carbon-intensive fuels such as coal for electricity generation help to stabilize U.S. energy-related carbon dioxide (CO2) emissions.” But the agency’s projections of electricity generation by fuel to 2040 still show overwhelming dominance by natural gas, nuclear energy and coal. At the most, renewable energy could achieve parity with nuclear power, but remain well below the agency’s projections for natural gas and coal. Today’s low oil prices are another challenge to the rise of renewables. What’s Theoretically Possible
According to Sarbjit Nahal, head of thematic investing in the global strategy division of Bank of America Merrill Lynch, and Beijia Ma, a principal in the group, significant changes are needed to advance renewable sources of energy. The UN’s Intergovernmental Panel on Climate Change (IPCC) said in a late 2014 report, “Continued emission of greenhouse gases will cause further warming and long-lasting changes in all components of the climate system, increasing the likelihood of severe, pervasive and irreversible impacts.” Because of a 40% increase in demand in energy by 2035, they say, we’re “on a carbon dioxide (CO2) emissions trajectory consistent with global temperature increases of two to 4.5 degrees Centigrade, making irreversible climate change a reality.”
They’re hardly alone in this assessment. “A new world energy economy is emerging,” said Lester Brown, president of Earth Policy Institute. “Our civilization needs to embrace renewable energy on a scale and at a pace we’ve never seen before.”
And it’s at least theoretically possible. A study by the National Renewable Energy Lab (NREL) concluded, “Renewable electricity generation from technologies that are commercially available today, in combination with a more flexible electric system, is more than adequate to supply 80% of total U.S. electricity generation in 2050 while meeting electricity demand on an hourly basis in every region of the country.”
Under a rapid expansion program, the world could have nearly five million megawatts of wind power by 2020, Brown said. He added, “Combined with an ambitious solar and geothermal expansion, along with new hydro projects in the pipeline, this would total 7.5 million megawatts of renewable generating capacity, enabling us to back out all the coal and oil and most of the natural gas now used to generate electricity.”
Mark Jacobson, a civil and environmental engineering professor at Stanford, and Mark Delucchi, a research scientist at the University of California, Davis’s Institute of Transportation Studies, have devised an ambitious scenario for a renewable energy takeover. “Our plan calls for millions of wind turbines, water machines and solar installations,” they wrote in Scientific American. “The numbers are large, but the scale is not an insurmountable hurdle; society has achieved massive transformations before.”
Specifically, their global plan imagines 3.8 million large wind turbines, 90,000 utility-scale solar plants, 490,000 tidal turbines, 5,350 geothermal installations and 900 hydroelectric plants. They estimate that the cost of generating power with this network would be less per kilowatt-hour than generating it with fossil fuels or nuclear power.
Other plans concur. “It is technically possible to achieve almost 100% renewable energy sources within the next four decades,” concludes the World Wildlife Federation’s (WWF) 2011 Energy Report, which sees wind, solar, biomass and hydropower as the future major players. “Energy derived from the sun, the wind, the earth’s heat, water and the sea has the potential to meet the world’s electricity needs many times over, even allowing for fluctuations in supply and demand.”
The WWF report estimates that a million onshore and 100,000 offshore wind turbines could meet a quarter of the world’s energy demand by 2050.
Moving Past Coal
Experts believe that to keep global temperatures from rising more than two degrees Celsius from pre-industrial levels, a goal of the Copenhagen Accord, the world’s energy emissions have to peak by 2020 and then quickly decline, reaching near-zero by approximately 2050.
One of the often-cited obstacles to achieving this goal is the world’s reliance on coal for both power and jobs. According to Charles Mann in The Atlantic, coal causes 25% more emissions than oil globally, but cleaning up the sector may not be as difficult as it first appears. Forty percent of the world’s climate emissions come from just 7,000 coal plants. And coal attrition is already happening. The Energy Information Administration reports that the combination of lower-cost natural gas and strong EPA standards for power plants is taking a toll. Not a single coal plant was opened in the U.S. in the first half of the year, and coal was only 39% of U.S. electricity generation in 2013, compared to more than 50% in 2004. The EIA reports that a big flurry of coal closings is expected by 2016.
"Uncertainty resulting from intermittent renewables can be reduced by ramping up grid interconnections, enabling load sharing. –Abyd Karmali"
The ongoing decline in coal has already lowered employment in the U.S. industry, lessening fears that a low-carbon future will kill jobs. So too has increased efficiency. Due in part to widespread mountaintop removal mining, which employs far fewer workers than underground mining, U.S. coalfield employment has slipped from more than 280,000 jobs in 1978 to less than 100,000 today—even as coal production increased in the same period to nearly a billion tons. The global picture is complex. Although coal production internationally is still increasing robustly, and the International Energy Agency sees demand growth of 2.1% annually through 2019, employment — at seven million jobs worldwide — has seen some losses. According to the Worldwatch Institute’s Vital Signs, “Many hundreds of thousands of coal mining jobs have been shed in China, the United States, Germany, the United Kingdom and South Africa during the last couple of decades, sometimes in the face of escalating production.”
Renewable power is already helping to compensate for coal industry job loss, with the Solar Foundation reporting 142,698 jobs in that industry in 2013, up nearly 20% from 2012. Global wind power could employ 2.1 million in 2030, at which time solar photovoltaics could have created another 6.3 million jobs.
Worldwide renewable energy employs 2.3 million people, either directly or in feeder industries, in part, says NREL’s “Dollars and Sense” report, because the technology is labor-intensive (more jobs per dollar invested than conventional electric power). Overall, the Center for American Progress (CAP) estimates that making a 40% cut in greenhouse gas from 2005 levels by 2035 would create 4.2 million overall jobs, with 2.7 million net when “estimated contractions in fossil fuel sectors” are factored in. CAP said the overall effect would be a 1.5% reduction in the unemployment rate.
Despite reductions in coal use and projected increases in clean-energy employment, China’s reliance on coal remains a formidable obstacle. Coal produces 70% of China’s energy, and almost four billion tons were burned there in 2012 — a major reason that China has become the world’s largest greenhouse gas emitter. From 2005 to 2011, China (with vast natural coal reserves) added the equivalent of two 600-megawatt plants every week, and from 2010 through 2013, it added coal plants roughly equal to half of all U.S. generation. (At the same time, China is committed to renewable energy — with hydropower included, it’s already at 20%, compared to 13% in the U.S. But demand is rising and so is production: China is planning to double its power-generating capacity by 2030.)
Technology and regulatory hurdles persist
The intermittency of wind and solar power remains a major hurdle, one that’s addressed by Jacobson and Delucchi. To tackle intermittency in renewable energy resources, Jacobson proposes interconnecting geographically dispersed wind, solar and water resources (through a smart grid), and where possible using hydro power to fill in supply gaps. He also advocates demand-response management, over-sizing peak generation (and producing hydrogen with the excess), and storing electric power on site (in batteries) or in grid-connected electric cars.
Abyd Karmali, managing director, climate finance, at Bank of America Merrill Lynch, agreed that uncertainty resulting from intermittent renewables can be reduced by ramping up grid interconnections, enabling load sharing. “Also having the right mix is key, such as using hydroelectric for baseline power where possible,” he said. “And, of course, it’s also a misconception to say that only renewable energy suffers from volatility — fossil fuel plants get knocked out for various reasons, and that’s not predicted in advance.”
Daniel Esty, director of the Yale Center for Environmental Law and Policy, believes that better battery storage — a holy grail for scientists worldwide — is the key to solving the intermittency problem.
According to Arthur van Benthem, assistant professor of business economics and public policy at the University of Pennsylvania’s Wharton School, current regulatory policy presents another critical obstacle to a low-carbon future. “Incentives for demand response such as real-time pricing for end users are often lacking, but would be instrumental to shift consumption from peak to off-peak hours.” In addition, says van Benthem, “The renewable industry will be at a persistent disadvantage as long as we don’t remove the elephant in the room: the fossil fuel electricity sector should pay the full social cost of their operations. In plain English, we need a carbon tax.”
A Ground-level View
Some countries are already working toward phasing out fossil fuels, with Germany being the most prominent example. The country, which gets 15% of its energy from nuclear power now, wants to phase it out by 2021 — with help from legislation such as the Renewable Energy Sources Act, which provides feed-in tariffs and other financial support. And its goal is to supply 80% of its electricity from renewables by 2050.
In the first quarter of 2014, clean sources produced 27% of Germany’s electricity, with 40.2 billion kilowatt-hours of generation. Nearly half of all new electricity generation in Europe is wind or solar, said George Washington University’s GW Solar Institute. But among the challenges to Germany’s success are power-price surcharges that have raised utility bills for some (and led to unrest among German manufacturers), and at least short-term increases in coal use and imports of renewables are ramped up.
“The easiest way to reduce our large-scale carbon footprint is to become a lot more efficient, and there is still a lot of low-hanging fruit that businesses are beginning to recognize.” –Eric Orts"
Germany’s renewable portfolio is about double the 13% in the U.S., and Europe’s commitment to a 40% carbon cut by 2030 will ratchet up its efforts substantially. Still, some states get a large percentage of their energy from renewables, often because of large hydro-electric resources. The U.S. Energy Information Administration expects that electricity generation from renewable sources will increase to 16% in 2040. Renewable portfolio standards (which set percentage goals for renewable energy) are operating in 30 states (plus the District of Columbia), and form a significant incentive if they’re heeded.
Corporations are also in the lead. Renewable energy is already providing power for 94% of Apple’s corporate operations. Walmart launched on-site solar for its American operations in 2005, and made its first major wind power agreement in Mexico the next year. By 2013, Walmart had 335 renewable energy projects worldwide, producing 2.2 billion kilowatt-hours annually and meeting nearly a quarter of the company’s energy needs. Walmart’s goal is to reach seven billion kilowatt-hours and be close to 100% renewable by the end of 2020.
Smaller companies, too, are making important strides. Steve Melink of Milford, Ohio, founded Melink Corporation, originally a HVAC testing firm, in 1987. In 2004, he attended a green building conference and had a “moment of inspiration. It opened my eyes that we were not on a sustainable path.” Today, Melink has deployed more than 100 strategies to get to its current net-zero energy status. In fact, the company’s embrace of sustainability led it to create a lucrative new business in solar leasing, including installation of two three-megawatt systems in Indianapolis and the $12 million 1.56-megawatt solar canopy system it recently built over the parking lot at the Cincinnati Zoo. According to Sophia Cifuentes, the zoo’s sustainability coordinator, having the solar system has resulted in 50 days a year that are effectively off the grid.
The Challenge of Getting There
Transportation is actually the fastest growing source of CO2 globally, and as such can offset the gains from installed renewable energy. The world car population topped one billion in 2011, and the International Transport Forum thinks it could reach 2.5 billion by 2050. Clearly, that’s not a sustainable number. Daniel Sperling, founding director of the Institute of Transportation Studies at the University of California, Davis, believes that the 87 million barrels of oil produced globally each day could climb to 120 million barrels under that scenario.
The transition to electric vehicles has the potential to blunt the oil consumption and climate impacts of the world’s cars, but there’s a long way to go. In the U.S. in 2014, 119,710 plug-in vehicles were sold out of 16.5 million total, and the numbers are smaller around the world. Electric cars are currently expensive, but with battery prices dropping, their momentum is likely to increase. Lower-cost (and longer range) cars, which cost much less to operate than conventional cars, will be attractive to buyers globally. Lowering emissions becomes a virtuous circle when the power running zero-emission electric cars comes from plants fueled by renewable energy.
Making cars more energy-efficient, as in the U.S. goal of 54.5 mpg fleet averages by 2025, is important, as is moving away from cars altogether. Mass transit is key, but other innovative urban policy is also pointing the way forward: The U.S. remains highly auto-centric, but cities such as Helsinki and Hamburg in Europe have ambitious, technology-aided, plans to go car-free or as close to it as possible. In place of private cars will be telephone-dispatched bus services, ride sharing, municipal bicycles and multiple rail options.
Virtually all the experts agree that the transition to a clean energy economy will be difficult. Carl Pope, the former executive director of the Sierra Club, points out that if clean energy investments result in a 5% reduction in global fossil fuel demand, the law of supply and demand would result in a sharp 25% to 30% drop in fossil fuel prices, increasing non-renewables’ appeal to consumers.
Robert Giegengack, professor emeritus of earth and environmental science in the School of Arts and Sciences at the University of Pennsylvania, agrees the transition won’t be easy, “but it is inevitable.”
Moving to renewables could take as long as 100 years, Esty said. Eric Orts, the director of Wharton’s Initiative for Global Environmental Leadership (IGEL) and a law professor at the University of Pennsylvania, also sees a fairly hard road ahead, but it’s an achievable goal. “I don’t think it’s an easy transition at all,” he said. “But I do think it’s possible, and we definitely need to move in that direction.”
Orts adds, “Even with wind and solar, it’s not simply zero emission — there are manufacturing costs, mining and maintenance issues. It should be said that the movement toward renewables has to be coupled with energy-efficiency efforts. The easiest way to reduce our large-scale carbon footprint is to become a lot more efficient, and there is still a lot of low-hanging fruit that businesses are beginning to recognize.”
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