Clean Edge Views
Amid Fracking and Politicking, 2012 U.S. Clean Energy Growth Deserves Closer Lookby Trevor Winnie
January 2, 2013
A superficial look at 2012 might leave America’s clean-energy supporters feeling a bit gloomy. Fracking and the shale gas boom dominated headlines, high-profile clean-tech bankruptcies consumed the boisterous presidential campaign, and reckless climate change-denialism remained a socially acceptable – even advantageous – position for some elected officials.
But despite all that, the last 12 months were actually surprisingly strong for the advancement of clean energy in the United States, with several highlights meriting a closer look.
As we’ve mentioned previously, sustained low-cost natural gas has not spelled doom for renewable energy as many feared it would – renewables accounted for 46 percent of new generating capacity added in the U.S. during the first 10 months of 2012 (with newly installed wind expected to have edged out new natural gas capacity for the year). Instead, natural gas and wind are both gaining ground and replacing aging coal-fired facilities.
On the solar front, the bad news for PV cell and module manufacturers has been good news for consumers, installers, and financiers as global production overcapacity continues to drive prices down, making solar more competitive in a growing number of markets around the country and the world. Through the first nine months of 2012, new U.S. solar capacity had already eclipsed 2011 market growth, and the Solar Energy Industries Association expects total 2012 PV installations to reach 3.2 GW, a 70 percent increase over the previous year. With more than 4.2 GW of utility-scale solar projects – PV and CSP – currently under construction in the U.S., solar deployment is showing no sign of slowing down. SolarCity’s recent IPO has even provided a rare stock market victory for clean energy, as the solar financing and installation company’s shares continue to trade above their offering price.
For wind power in the U.S., the impending expiration of the federal production tax credit (PTC) left little room for discussion of the sector’s growth during 2012. But the looming expiration fast-tracked many projects to beat the end-of-year deadline – and early estimates peg 2012 wind installations in the U.S. reaching somewhere between 8 and 12 GW, well more than the 6.8 GW added in 2011. In the just agreed-to fiscal cliff tax deal, the PTC was extended for one more year through the end of 2013. What the industry needs now is a 3-5 year declining subsidy extension, along with a level playing field brought about by the end of subsidies for its fossil fuel brethren.
While politicos bickered about the merits of PTC extension throughout the year, added wind capacity was leading to some striking milestones. In the final months of the year, grid operators in Texas (ERCOT), the Midwest (MISO), and the Southwest (Southwest Power Pool) each reported record levels of peak wind penetration – reaching 26 percent, 25 percent, and 30 percent of all electricity on the respective regional grids. These announcements mirrored news from earlier in the year, when utility Xcel Colorado reported that wind sources had achieved a staggering 56.7 percent of its grid generation on a blustery April night.
Further below the radar, 2012 also saw many promising signs for energy efficiency in the U.S. In March, fuel economy of all new vehicles sold in the U.S. topped 24 MPG for the first time ever, up 20 percent since late 2007, according to the University of Michigan. In September, the Recovery Act-funded Weatherization Assistance Program announced it had weatherized the 1 millionth home (just nine months after reaching its original 600,000 home goal). And in December, the do-nothing Congress managed to pass the American Energy Manufacturing Technical Corrections Act, a bill which Steven Nadel, executive director of the American Council for an Energy-Efficient Economy, called “a modest but bipartisan step forward.”
Make no mistake, 2012 wasn’t a rosy year for clean energy, but to focus only on doom and gloom would be selling the story short. Finding these elusive highlights might even hint at where successes will come from in 2013 and beyond. Vehicle efficiency will continue its march to meet stricter CAFE standards; energy efficiency “negawatts” will remain the best bang for the buck; steadily falling solar prices will bolster the role of distributed energy; and the wind industry, if it can finally get a level playing field, should emerge better positioned to endure in an eventual post-PTC world.
Trevor Winnie is Clean Edge's senior research analyst and contributor to Clean Tech Nation (Ron Pernick and Clint Wilder; HarperCollins, 2012). Trevor also serves as a director of the Pacific Northwest Chapter of Environmental Entrepreneurs (E2), a national community of business leaders promoting economically sound environmental policy. E-mail him at winnie[at]cleanedge[dot]com.