Renewables poised to thrive, despite Washington gridlock
In the wake of the presidential election, the energy industry is beginning to piece together the potential implications of a second Obama term on energy policy and standards, which could have big impacts on the future of electricity generation and grid operation in the United States.
In the wake of the presidential election, the energy industry is beginning to piece together the potential implications of a second Obama term on energy policy and standards.
While the coal and gas industry tend be wary of more clean energy reform (coal retirements are already gaining traction), the fact is that Obama is still faced with a Republican-dominated Congress likely unwilling to approve environmental regulations that could be seen as costly to businesses and ratepayers. And the President is still being haunted from the fallout of a $535 million loan guarantee made to failed green power company Solyndra, which in the eyes of many damaged his credibility in handling renewable energy issues.
All these obstacles, coupled with the fact that energy policy typically pales in urgency when compared to tax reform, deficit and social issues, mean that Obama will likely have a tough time pushing through any of his "all of the above" energy legislation initiatives before exiting the White House in 2016.
It will certainly take some creative solutions and whole lot of political savvy, noted Alfred Zacher, author of Presidential Power in Troubled Second Terms.
Public wants renewables
But despite all this (and not to mention the dirt-cheap price of domestic natural gas), it's not a stretch to say that a majority of people want renewable energy to be part of the country's energy future. And individual utilities and companies have an opportunity to take renewable energy development into their own hands.
NREL predicts that commercially available renewable energy technologies, along with a more flexible grid, could provide up to 80 percent of U.S. power generation by 2050. ___________________________
"Consumers, especially younger consumers these days, expect the business out there and all of us in the industry to figure out how to make sure we keep bringing more renewables into the mix," said Drew Murphy, Executive Vice President of Strategy and M&A at NRG, during the October RETECH conference.
This could all play into Obama's favor, and be used as fodder in making the case for Federal energy legislation.
Still, in a conversation with FierceEnergy, Zacher noted that the possibility of new energy regulation is "very dim." He did, however, suggest that a lack of policy won't undo renewable energy progress already being made across the country. Simulated models have shown that attaining significant levels of renewable generation in the U.S. is possible, albeit ambitious.
In June 2012, the National Renewable Energy Lab (NREL) released its "Renewable Electricity Futures Study", which was sponsored by the Department of Energy, and examined renewable energy and technical issues dealing with operation of the U.S. grid as a whole.
The report concluded that "a future U.S. electric system that is largely powered by renewables is possible," said Karlynn Cory, a senior energy analyst at NREL, presenting at RETECH.
More specifically, it predicted that commercially available renewable energy technologies, in partnership with a more flexible grid, could provide up to 80 percent of U.S. power generation in 2050 while meeting electricity demand in every U.S. region. An IEEE analysis of this report shows that this scenario requires 439 gigawatts of installed wind capacity by 2050. To date, the U.S is only at about 50 gigawatts, so meeting the NREL model could mean building as many as 3000 wind turbines annually for the next 40 years, according to IEEE.
An ambitious goal
This is an ambitious goal, but utilities may have little choice in the matter, as new air toxic standards from the U.S. Environmental Protection Agency continue to make new coal generation difficult. Utilities have four years to comply with the rules, which have raised concerns about the negative impact on electric reliability and cost. In addition, the Washington Post notes that the EPA is currently reviewing hydraulic fracturing impacts and could bring new proposed rules sometime next year.
All in all, the Obama Administration alone does not have the force to produce a deluge of renewable energy mandates down on the industry. His re-election does not signal a surefire sea change of energy policy. But either way, the next four years are going to see more and more businesses and utilities enter into the space, as pressure builds to continue providing energy that is both affordable and reliable.
"Any energy company that is going to be successful growing and returning money to its shareholders and investors is going to have a significant renewable component to its business," NRG's Murphy said.