2007: A Banner Year for Renewables in the U.S.

Last year was a banner year for renewable energy in the United States, especially for the wind industry. As the recent REN21 Renewables 2007 Global Status Report highlights, the industry broke all past global records, installing 5,244 megawatts (MW) of new wind energy capacity in 2007, or 30 percent of all new U.S. capacity added. This brings the cumulative national total close to 17,000 MW—enough to power more than 4.5 million U.S. homes.

The United States continues to lead the world in production and use of ethanol as well, with most of this coming from corn. The industry had about 6.9 billion gallons (more than 26 billion liters) of annual production capacity in 2007—a 60 percent increase over 2005—and most gasoline in the United States is now blended with ethanol.

In addition, the nation is helping to lead a resurgence of concentrating solar power, with two new parabolic trough plants completed during the past two years, for a total of 65 MW of new capacity. And more than 2,000 MW of additional capacity are now planned or under construction.

In the United States, and increasingly around the world, investing in renewables is no longer just about doing the right thing and being green. It’s also about making green, and investment trends reflect that thinking. The United States invested more than $10 billion in new renewable capacity in 2007, coming in third behind Germany and China. Most of this went to new wind power installations.

There was also a huge surge in U.S. venture capital investment in renewables in 2007, greatly due to increased investment in solar energy. Other major recipients of venture capital money were wind power and biofuels—particularly work on next generation fuels, which are expected to be more sustainable than the current food-based biofuels. The United States ranks first in venture capital investment in renewables, accounting for more than 60 percent of the global total in 2006. And U.S. levels will only rise in coming years with new efforts like Google’s program to make renewables cheaper than coal.

Much of this investment is driven by government policy, as well as speculation that the United States will soon put a price on carbon.

At the federal level, support for renewable energy has been inconsistent. The most important policy, the Production Tax Credit (PTC), has helped drive development, particularly of wind power. But the PTC has expired and been extended numerous times since it first came into effect in 1994, creating cycles of boom and bust. It is set to expire again at the end of this year, but is likely to be extended before the year is out.

The federal Renewable Fuels Standard, the only national long-term policy for renewable energy, was just extended and expanded late last year, calling for production of 36 billion gallons (136 billion liters) of biofuels by 2022.

The states have really been the biggest drivers of renewables, with many now competing to be the new hubs for clean energy industries and green jobs. Twenty-five states plus Washington, D.C., now have Renewable Portfolio Standards (RPS)—or mandated targets—for electricity generation; an additional four have voluntary policy goals. During the past two years, five states added RPS laws, and at least nine states strengthened existing targets.

Several states have adopted other policies to support renewables as well, with some now considering feed-in laws. Feed-in laws guarantee renewable energy generators—whether farmers who install wind turbines, homeowners who put photovoltaics (PV) on their rooftops, or large utilities that develop large-scale renewable energy projects—a guaranteed market with priority access to the electric grid and long-term fixed payments. They have been extremely successful in Germany and elsewhere, and are now used in nearly 40 countries around the world, including 18 EU countries. Over just the past six months, feed-laws have been introduced into the legislatures in several U.S. states, beginning with Michigan last September. In addition, many states are now part of regional carbon cap and trade programs that could also lead to significant increases in renewable energy use.

California, one of the top states for renewable electric capacity, captured 70 percent of the nation’s PV market in 2006. Thanks to a new Solar Initiative, the state is set to rival Germany, the world leader, in solar PV over the next several years. California aims to install 3,000 MW of new solar electric capacity by 2017, with a state budget of $3.3 billion.

And cities are getting in on the act as well. From San Francisco and Portland in the West Coast to New York City on the East Coast, and from Chicago in the North to Austin in the South, U.S. cities are competing to be green, adopting renewable energy targets and incentives. They are doing so because of a growing recognition that renewables can help them to meet a number of goals: new jobs, carbon emissions reductions, a more secure and stable energy supply, a cleaner environment, and better health for their citizens.

Overall, the United States has enormous potential for renewable energy, particularly in combination with energy efficiency improvements. Only a small share of these resources has been tapped to date. Renewables technologies are available today and can be scaled up rapidly to meet our rising energy demand and to get the country on track to make needed reductions in carbon emissions by mid-century. We can expect even stronger growth in renewables in the United States over the coming years, particularly if strong, consistent, and long-term policies are in place at all levels of government.

Janet L. Sawin is a senior researcher and director of the Energy and Climate Change Program at the Worldwatch Institute, a Washington, D.C.-based environmental research organization.

Last year was a banner year for renewable energy in the United States, especially for the wind industry.