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Green Skies for Renewable Energy
November 2005
STANFORD GRADUATE SCHOOL OF BUSINESS—With war raging in the Middle East, oil prices rapidly rising, and concerns over the cost of electricity proliferating in the United States, it's like 1979 all over again. This time around, however, wind, solar, and other renewable energy sources have reached the critical mass to appear at least as recognizable slivers on the pie chart of the U.S. energy portfolio. "Renewables" increasingly are easing the nation's reliance on fossil fuels.
Renewable energy is a promising field for the ecologically and economically minded alike, but it will need a consistent hand from Uncle Sam to truly establish itself, experts helping build the country's clean energy infrastructure told a Graduate School of Business audience.
Consumer demand for less polluting and more efficient energy combined with ever-increasing fossil fuel prices have demonstrated even to large corporations that developing renewable resources is big business, said panelists at the 13th annual Net Impact Conference Nov. 11. Tim Lasocki, marketing development manager for GE Energy's Clean Energy America enterprise, told listeners that the company that "brings good things to light" is now developing equipment for wind turbine, biomass, geothermal, solar, and coal gasification technologies.
Wind in particular is the fastest-growing energy segment in North America. "It is not a niche business for GE but rather at the heart of power generation for us," he said, noting that the wind company GE acquired in 2002 earned a significant $2 billion in revenues in 2005.
On the other end of the corporate spectrum was Mike Hall, chief marketing officer for the small company Borrego Solar, which designs and builds solar electrical systems for residential, commercial, and government clients in California who want to reduce their utilities usage. "We've had greater than 50 percent growth every year since we started the company and can't even keep up with demand," Hall said.
Energy deregulation in Europe has meant that commercial users and soon even private consumers will be choosing their utilities companies, said Matt Lecar, vice president of projects for Easenergy, the North American venture arm of Electricité de France (EDF). In a part of the world where clean energy is highly valued, EDF is attempting to attract customers by partnering with renewable technology partners, Lecar said. Mark Tholke, vice president of project development for Eurus Energy America Corp., a global wind power developer, said his company sees so much potential in wind that it is moving to own and operate the wind plants it puts together rather than sell them off.
While skies may be green for the renewable energy sector, at the same time the field has suffered from governmental support at the national and state level as fickle as the wind itself, panelists said. "Government subsidies for investing in on-site renewable energy are making solar a viable business in California right now," said Hall. "Solar photovoltaic energy is relatively expensive, so without those subsidies it's hard to compete with the power utilities. Government support is there but rocky, with most programs being only short term."
"Continuous investments in R&D are needed to get the costs of energy down," echoed Lasocki, "but that will require government backing." Lasocki said subsidies and tax breaks are nothing new for the energy industry. "Energy has been a fairly highly regulated and policy-driven business since the 1950s," he said. "Fossil fuel businesses have received government support for decades and still do."
Bullish on renewables nonetheless, panelists enumerated a wish list for technologies and other efforts that will help support a cleaner energy future. Hall said he hoped researchers would continue to make solar systems more efficient and cost effective. "It's just an engineering question, not a fundamental physics problem," he said. Lasocki said improvements in the areas of weather and wind forecasting would make wind a more reliable source of energy production, while Lecar noted that figuring out a way to connect intermittent sources like wind and solar into the power grid more elegantly would enhance the utility of these resources. Tholke said focusing on the public policy arena was key, and that corporations and citizens alike need to keep exerting pressure on the local, state, and national levels to make supporting renewable energy a priority.
—Marguerite Rigoglioso