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BCSE In The News

Investments head downward, again -- trade group

By: Henry Gass, E&E News
Published: Monday, December 9, 2013

Investments in renewable energy technology are likely to continue to decline in the near future as clean energy businesses try to scale up production amid falling prices, industry leaders said at an event on Capitol Hill on Friday.

After an incentives-driven boom in renewables deployment in 2008-09, investment in the technology has leveled off and begun to decline as regulatory uncertainty stifles the development of large-scale, time-consuming projects.

On Friday, the Business Council for Sustainable Energy, an industry trade group, convened a panel with the House Renewable Energy and Energy Efficiency Caucus to discuss recent investment and policy trends in renewable energy markets.

Ethan Zindler, head of policy analysis for Bloomberg New Energy Finance, began the panel by breaking down the decline in renewable energy investment from its $300 billion peak in 2008.

"I can say with some high degree of certainty that we're going to be down again" this year, he said.

Investment hasn't declined for entirely negative reasons, however. Renewable technologies are cheaper than ever, particularly solar photovoltaic systems, providing investors with "more bang for your megawatt," as Zindler described.

Zindler also said he expected international demand to pick up, particularly in developing countries like Uruguay and Brazil, meaning an export market could open up for U.S. renewable energy.

"We're entering a new era of ambiguity," he said, and renewables are "becoming cost competitive with their fossil rivals ... and we're seeing more activity that's driven by economic reasons solely."

Pleas for tax credit extension

The panel identified regulatory uncertainty as one major obstacle to growth in renewable energy investment.

The popular production tax credit -- which helped install a record 13,000 megawatts of wind power in 2012 -- is set to expire at the end of the year. With some opposition to the PTC mounting, debate to extend it is unlikely to begin until next year (Greenwire, Dec. 2).

In the past, tax credits for renewables got one-year extensions as a compromise between the two opposing sides, but for the industry experts at Friday's panel, even another one-year extension would not be enough certainty for investors.

Waste-to-fuel facilities, for example, are large pieces of municipal infrastructure providing base-load power and often take longer than one year to get up and running.

The same can be said for geothermal and hydropower, where the permitting and construction processes can take five to 10 years to complete.

"Rushing to do a hydro project in a year is just not something that's possible," said Jack Thirolf of Enel Green Power North America Inc.

And the panelists pointed out several examples of renewable industries that benefited from a lengthier tax credit.

In 2008, the solar PV industry got an eight-year extension of the 30 percent investment tax credit. Scott Hennessey, director of policy and electricity markets at SolarCity Corp., said the extension "has been a great driver for our industry," one of the fastest-growing renewable sectors in the U.S.

The same can be said for wind power, which saw the domestic deployment of U.S. wind turbines jump from 25 percent to more than 70 percent after the PTC was introduced in 2009.

"We do hope and expect there will be another extension [of the PTC] at least by next year," said Rob Gramlich, senior vice president at the American Wind Energy Association.