NEW ENERGY: DEMAND OVERWHELMING SUPPLY

Good news? Yes, but the growing gap between demand and supply threatens to drive the cost of renewable energy up, making it less competitive. Long term, the cost of New Energy will meet the cost of fossil fuels as production of the former expands and its price comes down while the price of the latter gets more costly due to emissions surcharges. There may, however, be bumps in the road ahead.

Clean energy can’t meet growing demand
Paul Davidson, October 4, 2007 (USA Today)

WHO
National Renewable Energy Laboratories (NREL)

The inevitable long term picture. (click to enlarge)

WHAT
Demand for renewable energy is growing much faster than producers can supply it.

WHEN
- By 2010, demand is expected to be 37% ahead of supply unless there is an unexpected boom in new project financing and completion.
- Corporations have boosted renewable energy purchases 25 times since 2001.
- By 2015, New England will have a 1,500 megawatt overdemand and Northeast Utilities expects to need to import renewable energy from Canada – but the transmission to do so is not presently adequate.

WHERE
- 25 states now have RESs, guaranteeing demand.
- Renewable prices have doubled in the last 1-2 years in the Northeast, the Mid-Atlantic and the Plains and are up 50% in the West.

More and more states are putting themselves on the map -- with a Renewable Electricity Standard (RES). (Renewable Portfolio Standard is an older phrase for the same thing.) The RES drives demand. With bottlenecks in supply, that may create short term problems but it leads to more New Energy in the long run. (click to enlarge)

WHY
- There were only 10 states with RESs in 2003. The increase to 25 is one major impact on demand for renewables.
- Consumer and business purchase of renewables is up 46% since 2003.
- Utilities and their customers have boosted renewable demand with Renewable Energy Credits (RECs). The customer pays over the bill amount and the utility uses the overpayment to purchase electricity from renewables.
- Wind supply has grown 30%/year but there is a worldwide shortage of turbines and some NEMBY resistance to development.
- NREL predicts a 1-2 year lag between rising demand and adequate supply.

QUOTES
Lori Bird, senior analyst, NREL: "Demand is growing faster than people expected…"