Some major chemical and energy companies cut their investments in renewable energy over the past few weeks, saying their shareholders deserved quicker payouts.
And the Texas Public Utility Commission just last week spurned a request from environmental groups to set a target for solar-generated electricity sooner than 2025.
But if any of that was meant to signal the end of alternative energy, someone forgot to tell the industry.
It may be at a crossroads, but it isn’t down and out, said John Pappas, director of the Wind Energy Center at Texas A&M University.
“The supply chain has clearly taken a hit, but there are still opportunities,” he said.
A credit that gives wind generators a 2.2-cent tax break for every kilowatt-hour of power produced expires at the end of this year.
Without congressional action, it will disappear regardless of who’s elected president. And tax breaks will face scrutiny as the government seeks to boost revenue, which could make it politically challenging to renew the wind credit.
“Given the deficit, it’s going to be a higher bar,” said Amy Myers Jaffe, executive director of energy and sustainability at the University of California at Davis.
Cheap and abundant natural gas has created another obstacle, offering some of the benefits people associate with renewable energy.
Still, research is continuing and market share growing.
Wind provided 8.5 percent of electricity to the portion of the Texas grid served by the Electric Reliability Council of Texas in 2011, up from 1 percent in 2004.
Seamus Curran, a solar researcher who is director of the Institute of NanoEnergy at the University of Houston, said the key will be deciding where to use renewables.
In the right place, he said, renewable energy is cheaper.
But Dow Chemical decided it wasn’t a good investment.
In discussing third-quarter results last month, Chairman and CEO Andrew Liveris said Dow would cut spending on programs, including alternative energy, where the payout was too far in the future.
“The world of alternative energy is going to dial down … because the world can’t afford alternative energy and subsidies right now,” he said.
BP said it won’t build a planned ethanol plant in Florida, although it continues with biofuel projects in England and Brazil and with research in the United States.
But the head of Germany’s electric grid predicts almost half of its electricity will be come from renewable energy in 10 years. And California has set targets for adding solar power to the state’s grid, along with additional targets for cutting emissions and the carbon intensity of transportation fuels.
Other states have similar goals.
“In some of the critical blue states, like California, Massachusetts and New York, the commitment to alternative fuels and renewable energy is very deep, and I do not see those policies changing no matter who is president and what the price of natural gas is,” said Jaffe, who moved to UC-Davis this year after 16 years at Rice University’s Baker Institute for Public Policy.
That enthusiasm for renewables will keep the major oil companies involved in alternative energy, despite occasional cutbacks, she said.
“The majors are not going to abandon biofuels,” she said. “They have to comply with low carbon fuels in California. All of Europe has these targets.”
An easy target
Shifting attitudes frustrate companies more than any one decision, said Pappas, who also is associate director of the Texas A&M Energy Institute.
“The question that seems to be hardest for industry to deal with – and this is across the board, whether it’s renewables or not – is how long the existing policy is going to last,” he said.
Natural gas, touted as a “clean” energy because of relatively low emissions, has taken much of the impetus from the push for renewables, said Kenneth Medlock, director of the energy forum at Rice’s Baker Institute.
“With natural gas prices being where they are, it’s difficult to make a convincing argument that renewables will be commercially viable on their own two feet,” he said.
Subsidies and tax credits for renewable energy become an easy target when state and federal budgets are under pressure.
“With the emergence of shale gas, you get a lot of the environmental benefits people thought renewables would give,” Medlock said.
Pappas, though, says talk that natural gas can replace wind energy in the nation’s electric grid is “oversimplifying.”
And he notes that oil and gas have received plenty of federal support, including research money to help develop hydraulic fracturing technology.
A&M, along with several other universities and private companies, is involved in a project to build a wind farm in the Gulf of Mexico near Brownsville. If it comes together, Pappas said, it is expected to be the first in the world to operate at a profit without subsidies.
Along with other researchers in the field, he believes renewable energy will remain hot.
‘Needs to be solved’
“Policy aside and politics aside, I think people realize this is a problem that isn’t going to go away and needs to be solved,” Pappas said.
With as much as 90 percent of the United States’ landmass off the electric grid, Curran also sees almost unlimited potential.
He developed a portable solar generator, dubbed the Storm Cell, after his family and their neighbors in Pearland were left in the dark after Hurricane Ike. It has drawn interest from oil and gas companies for its potential to power startup rig sites at remote sites.
That’s now done mainly by diesel generators; by the time companies add in transportation costs, the diesel can cost as much as $10 a gallon, he said.
“That’s where you can see solar as an ideal solution,” he said.