Alternative Energy: More Attractive, But No Quick Fix

Soaring oil prices should give a boost to alternative energy sources, but it is likely to be several years before they develop a meaningful share of energy supplies, Standard & Poor’s concludes in a new report.

To meet U.S. electricity needs, alternative fuels will likely play a greater role in the years to come, either through mandates or increasingly competitive pricing, S &P says. “Nevertheless, more often than not, it is substantial federal financial support that makes these changes happen.”

"At the very least, it will be many years before alternative fuels provide a significant share of power generation."

The greening of the power business, or the move away from fossil fuels (coal at older plants and natural gas at newer ones), shows up in the increasing use of renewable portfolio standards [RPS]. These state regulatory standards call for a certain share of energy in each state to come from non-fossil fuels. California is requiring 20% of its electricity to come from renewable energy by 2010 and is considering 33% by 2020, New York has a 24% goal by 2013, and Illinois wants 25% by 2025.

One concern is that the costs of these mandates aren’t immediately clear. “That uncertainty could result in the chief credit risk for utilities–that consumers could rebel at higher rates needed to bring power from renewable resources online,” says credit analyst Anne Selting. That risk increases in states that already have high energy rates and have also imposed aggressive RPS.

The high price of natural gas, however, is making investments in renewable resources look better and better to utilities, even without RPS.

Wind power, for example, is a strong contender in many areas, for investor-owned utilities such as MidAmerican Energy Co. and Xcel Energy Inc. (XEL), and for independent power producers such as FPL Energy (FPL), PPM Energy, and Invenergy. However, many people don’t like the look of big propeller turbines and some environmentalists have raised concerns about their effect on birds and other wildlife.

Moreover, wind resources suitable for generating large amounts of electricity are often located far from population centers, so transmission can be a costly issue. Wind is also still relatively expensive and much of its recent development has depended on federal production tax credits [PTC], whose future is uncertain.

Solar power, also still relatively expensive to produce, makes true economic sense mainly in areas where sunlight is not just abundant but also intense, such as parts of New Mexico and Arizona. A mix of both large and small utilities already use solar power, though as a share of total national power production it is still small. Industry growth also relies on the PTC, and some states mandate minimum solar power generation through the RPS.

Although hydropower can be an exceptional source of cheap, renewable energy, most of the opportunities for harnessing it have been tapped out in the U.S.

That leaves nuclear energy, by far the most controversial non-fossil fuel source of power. No nuclear power plants have been built for decades, but the rising demand for power is causing some utilities, such as Southern Co. (SO),SCANA Corp. (SCG), and Duke Energy Corp.(DUK), to consider this option. It’s far from certain that these efforts will come to fruition, and if they do, 2016 or so looks to be the earliest any nuclear plant would come on line, assuming the many regulatory, financial and public opinion hurdles can be overcome.

The full report, Automakers And Utilities Are Finding Alternative Energy More Attractive–But Not So Accessible, also addresses automakers’ efforts to reduce their dependence on petroleum.

Disclosure: None

Comments

[Piggybank]

Who cares if alt energy only makes up a marginal contribution to total world energy generation so far? it has to start somewhere. That they have such a small market share is rather an advantage, alt energy is still such a niche that even a small shift globbaly to alt energy would make a profound difference in demand for these company's.

Because solar is so small, and energy is such an issue now, it's quite logical that demand will surpass supply for years to come, even if it cannot solve our energy concerns alone, solar is likely to be picked up as atleast an alternative that enables more energy independance.

[Zenfar]

I was watching some talking head show and both sides of the energy debate were saying that the other guys ideas would take 2-3 years to get going... Well then let's get started!!! A compromise bill that includes solar, wind, nukes, and off shore drilling if states allow it should pass immediately! Quit the stalemate and the either or politics.

[Piggybank]

Yeah Zenfar is absolutly right. In fact were already behind on the alternative energy front for a decade really. Much of the current economic mess were in right now could have been partly prevented with more investment in al energy in the past.

i could forsee this crisis comming, many could. How can our policy makers be that stupid that they didn't see it comming? I'd say it's because all they really care about is if they will be ellected and how they can fill their own pockets, but looking a decade into the future and havig a vision on how to prevent tommorows problems, that aint something they are used to do.

So afcourse there isn't a quick fix around right now, nothing can quickly fix this current mess. We should have thought about those problems years ago, decade's even, when our economies were still relativly strong on cheap energy.

Personally, as a young person, i am of the oppinion that the older generations have squandered our energy sources, used it on an absolutly wastefull way for quick profit withought much consideration for future generations. It's pure egoism that oil is getting short in supply already. So what is left fo the younger generations? A shitload of mess to clean up, in so many different fields to.

So, then what if it takes years for solar and wind to bail us out of our problems, if people won't take it serious now then within 5 years we will have an even larger crisis where it will take even more years to solve the problems. And what is a few measel years in the grand scheme of a future vision?

[chinooking]

I'm with zenfar to use a redneck euphemism,,, (GET UR DONE)

[Wafarer]

Piggybank asks the question, 'how could our leadership not have seen this energy crisis coming'. I think the answer is they did but one side of the political spectrum counts big oil and big coal as constituents. These constituents demand payment for political contributions. This includes tax breaks that could largely fund the development of alternative energies. This is the current fight.

[fran]

ZENFAR. PIGGYBANK--

have you written your legislators yet with your positions, demanding action, requesting their positions. demanding a public disclosure?? if not, why? if so, what results? if dissatisfied, have you begun a public action group for persons of common view? if not, why not?

if you are dissatisfied, don't tell us. we can't do anything for you. we're busy doing actions behind above questions/proposals

how will you cast intelligent votes?

as said,rise from your positions[BUTTS]

[berberick]

When it comes to Washington they can't get anything done . They will only something done until it's probaly to late ! Recession , major job losses , gasoline at 5 plus dollars a gallon - maybe 5.50-6.00 by 2010. In 2001 worldwide demand was a little over 70 million barrels , now it's in the mid-80's .It's only getting started !

[Piggybank]

Well Fran, i'm from belgium, not the USA, and in Belgium they have been somewhat more forseeing in energy policy than in the USA actually, could be better, like Denmark, but it aint to bad. Europe is on the right track, not to early neither, but atleast not inconsiderate of the future neither.

But what does it matter that we Europeans save on our oil use when in certain other country's people people drive gas boozing Suv's and the likes. Wel it's not that we are that much better really neither, but the way people were squandering with oil in the USA has been a quite worse in the end for our current oil prices too.

I don't want to point to my finger to much across the pond, but the current credit crisis aint to positive neither for Europe's potential to addapt. if anything will drive European alt energy subsidies down, then it's this recession wich is mainly originating from the USA.

Well it's atleast not the American people in general i want to point my finger at. There are enough reactions to read on this site from Americans who criticize their goverment for not adequatly subsidizing alt energy, yet on the other hand giving freebie's to big oil.

I just can't understand how Americans could have voted bush. Twice in fact. I guess most of those voters are wondering the same now, he aint to popular anymore. If you think of it, you can actually blame him for quite a large part for this mess, wich is affecting everyone around the world. The Bush administration is well under way to bring the whole world to instabilety and ruin, and all for their own smallish little benifits. Bush is a dangerous nutcase.

I could understand that this oppinion could hold some controversy, but how do American citizins think foreigners involved in markets or affected by rising prices will look at this situation if they look at it superficially?

Imo it's more than just Bush afcourse who is responsible for this mess, humanity as a whole is responsible for the way it squanders with it's natural resources. You just have to look at the absurdity in wich we have handled fishing, youre typical example of tottaly inconsiderate fast money making wich ruins a far better approach of sustained usage.
It's this fast money making mentality withought consideration of the consequences for the future of others that, in so many ways, is ultimatly responsibel for all our problems here.

Just think of that mentality of "there is still enough oil on this world for a 100 years" . Well i doubt there is that much oil, and i doubt that even if there was that much oil that they could still produce enough of it at a given time to meet demand. But thats not the point. Even if there is enough oil for a 100 years, so what? 100 years will eventually pass to ,and people will still need alternatives. it's quite clear that in the end we will be to late with our alternatives to provide a smooth transition from fossil fuel economy to a alternative green economy, because people were only to react when it was to late anyway, as long as we arn't faced with a profound crisis there would always be someone to tell us that there is still enough cheap energy for decades to come, and then the market could be glad that it can revel in ignorance for some time still. Easy money making mentality withought consideration for the future.

The worst prospect for me is that i see the same thing happen with our ecoligy. they will understand that there was actually nessecity to do something when it's to late. As long as we arn't tin the actual crisis there is enough room to question this danger.

But seriously, who isn't absolutly stunned by the utter ineptitude wich resulted in this mess? Or better say greed than ineptitude. It's so wrong that it quite borders the criminal, this mess, wich could have prevented, will lead to starvation in many parts of the world. It might lead to many worse thing's in years to come too, who knows.

Maybe since the policy making of the USA has played a fairly large part in this crises, i should question myself who i should take responsible. Should i hold the American people as a whole as responsible because they voted and haven chosen these policy makers to represent them? Or should i conclude that the USA aint really that democratic like it looks, so that youre average voter didn't have really that much choice over this direction?

[Blue W.]

Piggybank:
Americans like all other people around the world are selfish and shortsighted. Our leaders revolve from stupid to brilliant. Our political system divides governmental powers among three branches: excutive, legislative, and judicial, and reserves all powers not given to the federal government to the states. The result is big changes are hard to do, particularly when the president is shortsighted like Bush. However, often one or more states will initiate needed changes even the the executive branch does nothing. This has occurred. As an example, California is subsidizing alternative energy and stem cell research. I am confident that the next president will follow California's lead. Another aspect of America is private initiative. Look at the work of the Gates Foundation. My Europeans relatives like to criticize the US. They fail to recognize that we are 4% of the world's population and have limited resources. Also, we came to their aid twice in the 20th Century; Europe would be very different without US help in ridding it of its dictators. With the forthcoming political changes, we will remove our army from Iraq and participate in the change to alternative energy sources, the reduction of green houses gases, and the increase in global food production.

[Piggybank]

Good post Blue W. I agree that the USA has done many good things for the world wich i want to recognize, and i recognize the efforts done by the state of california and others.

I did not want to offend Americans.We Europeans do long back to better times where the USA was more multilateral and considerate of our views, and where our partnerships resulted in shared prosperity. The Bush Administration has done just the opposite. i think most people in Europe know that mostly Bush is to blame, but we cannot but feel frustration for being saddled up with a mess that we didn't ask for, even explicitly adviced against. It's not that we are not gratefull for what the USA has done for us in the past, but we cannot else but be unhappy and dissapointed neither when the effects of our relation are suddently quite negative. We cannot just turn a blind eye for the sake of the past for the thing's bush has done, because it's just to much. We do not want to look ungratefull, on the other hand i can understand why French feel somewhat offended by past arrogant actions of the Bush administration, while France came to the aid of the USA a few times to.

But maybe we Europeans mostly criticize American politics because we want better for our friends. Europe has been heavily criticised for not aiding in iraq, but maybe thats because we thought it was for the USA's own good. That might be quite a sincere argument, how else can we achieve change for the better that by criticizing those thing's we see as problems in the USA? It has nothing to do with ungratefullness, rather concern for our friends.

Anyway, ill stop on that matter now. And i hope youre vision can find result in policy under a newly ellected president. Then all this can be forgotten, and we can be all good friends and partners again, and a united front for freedom in the world, heck maybe well even join in in squating down some of those real enemy's to our freedom and way of life. As to alternative energy, it looks like both presidential candidate's are already far more alternative energy orientated than Bush, that can only be good.