TODAY’S STUDY: THE U.S. NEW ENERGY MARKET NOW AND AHEAD

The Outlook For Renewable Energy In America 2014

April 2014 (American Council on Renewable Energy)

Executive Summary

The Outlook for Renewable Energy in America: 2014 assesses the marketplace and forecasts the future of each renewable energy technology sector from the perspectives of U.S. renewable energy trade associations. Each sector forecast is accompanied by a list of the trade association’s specific policy recommendations that they believe might encourage continued industry growth.

Renewable energy has now become a technology of choice for many Americans, accounting for nearly 40% of all new, domestic power capacity installed in 2013. Presently, renewable power capacity exceeds 190 GW, biofuels are responsible for roughly 10% of our nation’s fuel supply, and renewable thermal energy systems heat and cool a growing number of homes, businesses, public buildings, and other structures throughout the country.

The array of technologies are either fully or increasingly cost-competitive with conventional energy sources, and costs continue to fall. Per Bloomberg New Energy Finance, private-sector investment in the U.S. clean energy sector surpassed $100 billion in 2012–2013, stimulating economic development while supporting hundreds of thousands of jobs. The industry-specific authors of the Outlook forecast this growth to continue, driven by increasing cost-competitiveness with conventional generation, technology advancements, and growing acceptance by Americans to embrace clean and renewable technologies.

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The impressive growth of renewable energy over the past decade is a signal that, when certain, state and federal policies have worked. Further scale up requires evolving and cost-effective policies that drive continued private-sector investment. ACORE offers the following, high-level recommendations for growth:

• Building on the success of past and present policy efforts, reinvigorate effective policies to promote market certainty, stable growth, and align federal, state, and private initiatives.

• Increase access to greater amounts of cheaper and more liquid capital by extending to renewable energy innovative financing options that are successful in motivating capital formation in other sectors.

• Promote the expansion of all proven forms of renewable energy, whether centralized or distributed power generation, transportation fuels, thermal energy, or other technologies. America needs a diverse array of options to transform its energy sector to meet 21st century needs.

• Continue support of public and private research, development, demonstration, and deployment to fuel the next generation of renewable technologies.

• Build renewable energy in tandem with enabling technologies, such as energy storage, hydrogen fuel cells, waste heat, and smart grid technologies, to enhance system-effectiveness.

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A number of opportunities exist at the federal, state, and local levels for industry advancement and investment; however, they are not one-size-fit-all solutions for every renewable technology. The articles in this report detail specific market drivers for the biofuel, biomass, geothermal, hydropower, solar, waste, and wind energy sectors. We applaud the unity of the renewable industry community and their united front demonstrated in The Outlook for Renewable Energy in America: 2014.

With the right policy mechanisms in place, the potential of America’s clean energy economy extends beyond one fuel choice or pipeline, and provides the country with an unparalleled opportunity to reinvigorate our economy while protecting our environment. An America powered on renewable power, fuels, and thermal energy is a stronger, more secure, prosperous and cleaner America.

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The Outlook For Wind Power

The American investment in wind energy continues to pay off in the form of reduced costs, improved efficiency, and lower prices for consumers. The beginning of 2014 marked a record wave of new construction, and the American Wind Energy Association reported that wind power continues to lead the way on affordable, reliable renewable energy.

“In many parts of the country today[...] wind is the most economic form of new energy generation,” as NextEra Energy Chief Financial Officer Moray P. Dewhurst said on a recent earnings call.

Investments in technological advancements and stable policy have helped drive down the cost of wind energy by 43% in four years, and the industry remains on schedule to grow to supply 20% of the U.S. power grid by 2030, and beyond…

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The Outlook For Solar Energy

Existing Marketplace

The U.S. solar industry has much to celebrate about the year 2013. Photovoltaic (PV) installations continued to proliferate, increasing 41% over 2012 to reach 4,751 MWdc, and 410 MWac of concentrating solar power (CSP) plants also came online. Solar was the second-largest source of new electricity generating capacity in the U.S., exceeded only by natural gas. And the cost to install solar fell throughout the year, with average system prices ending the year 15% below the mark set at the end of 2012.

The U.S. solar market showed the first real glimpse of its path toward mainstream status in 2013. The combination of rapid customer adoption, grassroots support for solar, improved financing terms, and public market successes indicated clear gains for solar in the eyes of both the general population and the investment community. And in the long term, a mainstream solar industry will need customers who seek out and support solar, as well as investors who see an attractive risk-adjusted opportunity in the market.

The solar industry also became a major part of a much larger discussion that took center stage in 2013 around the future of electricity and electric utilities. As distributed solar gains steam, and as adjacent technologies such as energy storage become economically viable, the traditional utility business model is increasingly called into question. Throughout the electricity industry, 2013 was the year of catchphrases such as “utility 2.0” and “utility of the future.” Utilities themselves began to stake out positions on all sides of the issue, some seeking to protect their current territory and others investing in distributed generation— capitalizing on the opportunity that comes with change…

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The Outlook For Geothermal Energy

Existing Marketplace

In early 2014, the United States’ installed geothermal power capacity is about 3,442 megawatts (MW). The Geothermal Energy Association (GEA) identified 182 projects under development as of September 2013, representing about 2,500 MW of planned capacity additions in the pipeline in 13 states. Image 1 shows total installed capacity in the U.S. over time since 1971. GEA will release new statistics in April, and while we expect a drop in total projects due to expiration of the production tax credit (PTC), inadequate transmission, and lackluster renewable portfolio standard (RPS) markets, we do not expect the drop to be as precipitous as witnessed in some other industries facing similar circumstances…

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The Outlook For Hydropower

Existing Marketplace

Hydropower is the largest source of renewable electricity in the United States, responsible for over half of all renewable electricity generation last year and 7% of total generation. In fact, the largest power producing facility in the U.S. is the Grand Coulee Dam in Washington State, with an installed capacity of over 6,800 megawatts (MW).

Using hydropower provides enough clean power for 30 million typical American homes and annually helps avoid nearly 200 million metric tons of carbon emissions. The 100,000 MW of total hydropower capacity also includes approximately 20,000 MW of pumped storage hydropower, which presently provides 98% of all energy storage in the United States.

Hydropower is unique among energy resources due to its ownership. The federal government owns just over half of the hydropower capacity in the United States. The other half is held by non-federal entities that receive licenses from the Federal Energy Regulatory Commission (FERC). These entities include investor-owned utilities, public utilities, and independent power producers. Hydropower is also a powerhouse of economic development. For over a century, hydropower has provided clean energy that powered our way out of the Great Depression and fueled the war effort in the Second World War. Today, the industry employs between 200,000-300,000 American workers and supports a vibrant supply chain of over 2,500 companies that reaches from coast to coast. Navigant Consulting found in 2010 that with the right policies in place, the industry could support an additional 1.4 million cumulative jobs by 2025 while expanding hydropower capacity by 60,000 MW…

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The Outlook For Marine And Hydrokinetic Energy

Existing Marketplace

The marine and hydrokinetic (MHK) renewable energy sector is an emerging industry with an ever-changing outlook, and significant challenges and advantages coming from existing industries, international competition and cooperation, and competition for limited resources. The examples of cooperation have in many ways created models of inspiration, as competitors acknowledge that no country has substantial market share at this time, and that all boats rise with the tide.

Some areas of international collaboration include U.S. participation in the International Energy Agency’s (IEA) Ocean Energy Systems (OES) initiative, which brings together 19 countries and the International Electrotechnical Commission’s (IEC) Technical Committee 114 (TC-114) for marine energy, with 14 participating countries and nine observing countries…

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The Outlook For Biomass Energy

Biomass Power

Existing Marketplace

The biomass power sector has undergone significant growth in recent years. The 2013 completion of several large-scale projects added up to more than 750 megawatts (MW)—enough to power hundreds of thousands of homes and businesses. All regions of the country have experienced some biomass growth, but the Southeast has experienced the most, with major new facilities opening in Gainesville and Brooksville, Florida; Altavista, South Boston, Hopewell, and Southhampton, Virginia; Dorchester and Allendale, South Carolina; and Barnesville, Georgia. Much of the growth can be directly attributed to federal incentive programs, which have since expired. The Treasury Department’s 1603 Grant program, established in 2009, helped to make several of these facilities a reality by securing loans needed to attract serious investors.

Five-Year Outlook For The Biomass Industry

Opportunities for further development, while difficult to predict, are significant…

Biomass Thermal Energy

Existing Marketplace

Thermal energy represents more than 30% of all energy consumption in the U.S. The market for biomass thermal energy, generated from combusting organic matter for heating or cooling purposes, has seen continuing growth in regions of the United States where there are: (1) high fossil fuel costs; (2) reliable access to renewable biomass feedstocks; and (3) year-round or prolonged heat energy demand…

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The Outlook For Waste-To-Energy

Existing Marketplace

Waste-to-energy (WTE) is a proven technology used globally to generate clean, renewable energy from the sustainable management of municipal solid waste (MSW). Progressive communities around the world employ strategies to reduce, reuse, recycle, and recover energy from waste. Post-recycled MSW is an abundant, valuable, and underutilized source of domestic energy. By processing this material, WTE facilities: produce renewable, base-load energy; reduce greenhouse gases; create good-paying, green jobs; operate with superior environmental performance; and complement recycling goals…

The Outlook For Ethanol

The renewable fuel standard (RFS) has been a resounding success story. The RFS is the primary driver behind the only large-scale, commercially-viable alternative to regular gasoline—ethanol. Ethanol has reduced our dangerous dependence on foreign oil and made our nation more energy independent, created American jobs, revitalized rural America, injected much-needed competition into a monopolized vehicle fuels market, lowered the price at the pump, and improved the environment. Ethanol’s record is a great record of successful accomplishment…

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The Outlook For Biodiesel And Advanced Biofuels

Overview

The world has witnessed a sea change in the drivers of energy production and demand. Moving toward 2035, a minimum of three factors will play heavily in terms of how the United States considers its energy future: supply, demand, and public policy. In 2009, Cambridge Energy Research Associates, in their Future of Global Oil Supply report, suggested that by 2030 the world would demand around 110 million barrels of oil a day and that, despite new liquid resources, current oil reserves, fields under development, and production from unconventional liquids, there would be a gap of 35 million barrels a day that would need to be filled. Recent modeling continues to support this, as the U.S. Department of Energy's (DOE) Energy Information Administration (EIA) AEO2013 estimates global petroleum and liquid fuel consumption for 2040 to be between 111 million and 118 million barrels per day, forcing new production of liquid fuels from biomass, coal, and natural gas…

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