u.s. renewable energy market and growth

Renewable Energy in the United States: Resources, Market Growth and PolicyGrowth and Policy

Matthew J. Stamatoff

Brooke Heaton

Berlin, Germany

December 1, 2009

Produced by Brooke Heaton and Matthew Stamatoff for the German Federal Ministry for the Environment, October 2009

“To finally spark the creation of a clean energy economy, we will double the production of alternative energy in the next three years…We will double our capacity to generate alternative sources of energy like wind, solar, and biofuels…“

- President Barack Obama, Jan 8, 2009 - President Barack Obama, Jan 8, 2009


� US Energy Market and Renewable Energy Resources

� Current Energy Consumption

� Current Energy Mix

� Solar, Wind, Biomass and Geothermal

Presentation Overview: Part I Brooke Heaton

� US Renewable Energy Market Growth

� State-Level Policy Tools

� Renewable Portfolio Standards (RPS),

� Tax Incentives, Rebates, Loans and Grants

� Interstate Cooperation – WREZ Initiative


Current US Energy Consumption and Energy Mixand Energy Mix


Annual Per Capita Energy Consumption 2005(kgoe)

7885

5000

6000

7000

8000

9000

4187

1778

0

1000

2000

3000

4000

5000

World

Europe

United

State

s

Canada

Singap

ore

Swed

en

Russian F

edera

tion

Czech

Rep

Ger

man

y

Japa

nUnite

d Kin

gdom

Italy

Poland

Venez

uela

Mex

ico

China

Kenya

India

(Data Source: WRI 2009)


US Greenhouse Gas Emissions by Sector (TG CO2 Eq)

2.000

2.500

3.000

Electricity Generation

Transportation

(Data Source: US EPA)

0

500

1.000

1.500

1990 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Transportation

Industrial

Residential

Agriculture

Commercial

Energy Consumption - Coal

(Source: National Public Radio 2009)


Energy Consumption - Gas



Energy Consumption - Nuclear



Energy Consumption - Hydro



US Transmission Lines (345 kV+)

Demand


Wind

Solar

Demand


US Energy Mix

(Source: Energy Information Administration: „Renewable Energy Consumption and Electricity Preliminary Statistics 2008, Table 1“: Published June 2009)


Sources of Electric Energy

Nuclear Power

21%

Natural Gas

17%

Petroleum

1%

Renewable Energy

9%

21%

Coal

52%

(Source: Energy Information Administration, Annual Energy Review, Figure 2.0, 2008)


Sources of Transport Energy

Natural GasNatural Gas

2%Petroleum

95% Renewable Energy

3%



Sources of Industrial Energy

Natural GasCoal

9%40%

Petroleum

41%

Renewable Energy

10%

9%



Sources of Residential and Commercial Energy

Natural Gas

76%

Coal

1%76%

Petroleum

16%

Renewable Energy

7%

1%



Renewable Energy Capacities (2008)

80

100

120

Gig

aw

att

s

Geothermal

Solar PV

Biomass

Small hydro

Wind

0

20

40

60

EU-27 China United States Germany Spain India Japan

Gig

aw

att

s

(Source: REN21, Renewables Global Status Report 2009 Update)


Solar, Wind, Biomass and Geothermal ResourcesGeothermal Resources


(Source: National Renewable Energy Lab 2008)


US Renewable Energy Market GrowthMarket Growth


US Renewable Energy Market

� Renewables contribute to 7% of total US energy demand and 9% ofelectricity

� 51% of renewable energy is used for electricity by electricityproducers. Most of the remaining 49% is used for d industrialapplications (principally paper industry)

� US is 2nd largest renewable energy producer in the world

� Current Electricity Generating Capacity of Renewable Sectors:

□□Wind 31 GW □□ Biomass 8 GW □□ Solar PV 1100 MW □□ Geothermal 3 GW

□□ Solar CSP 418 MW

(Source: Energy Information Administration)


2008: Strong Advancements in the US RE Market� Total Renewable Energy Capacity of 40 GW (2nd in world).

� Became leader in new capacity investment with $24 billion.

� Added more power capacity from renewables than from � Added more power capacity from renewables than from conventional sources (gas, coal, oil, and nuclear).

� Led in total wind power capacity with 25 GW, surpassing Germany (24 GW).

� Added over 8,5 GW of wind, 310 MW of PV, and 400 MW of CSP.

(Source: REN21)


US Renewable Electricity Capacity* 2006-2030

Pro

du

cti

on

Ca

pa

cit

y (

GW

h)

40,00

50,00

60,00

70,00

*Electricity Only, Exludes Hydro (Data Source: Energy Information Administration)

Pro

du

cti

on

Ca

pa

cit

y (

GW

h)

0,00

10,00

20,00

30,00

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

Year

Offshore Wind

Solar Photovoltaic

Solar Thermal/CSP

Geothermal

Biomass

Wind


State-Level Policy Tools


State Renewable Portfolio Standards (RPS)� RPS require a percentage of an electricity producer‘s total retail electricity sales

to derive from renwable energy resources.

� 29 US states have established an RPS: California: 33% renewables by 2020

� Utilities comply with this percentage target by purchasing certified Renewable Energy Credits (RECs)= 1 MWh of REEnergy Credits (RECs)= 1 MWh of RE

� RECs may also be purchased voluntarily. The US voluntary market is larger than the mandatory market.

� RECs can be traded in the marketplace, are certified by independent NGO‘s, and tracked by regional tracking systems.

� RECs provide a market solution to promote RE, increase liquidity, break down geographic barriers and monetize renewable attributes.

(Source: dsire.org)


33% by 2020

40% by 2017

Renewable Portfolio Standards29 States have RPS, 6 have goals

State renewable portfolio standard

State renewable portfolio goal

(Source: dsire.org)


State Tax Credits and LoansCorporate tax credits (25 states)� Credits, deductions and exemptions provided to corporations that purchase

and install eligible renewable energy or energy efficiency equipment, or to construct green buildings. Typically, there is a cap.

Personal tax credits (22 states)� Credits and deductions to individuals to reduce the expense of purchasing

and installing residential renewable energy or energy efficiency systems and equipment. and equipment.

Property tax incentives (34 states)� Provided by local tax authority in the form of exemptions, exclusions and

credits.

State Loans (45 states)� Offered to the residential, commercial, industrial, transportation, public and

nonprofit sectors to provide financing for the purchase of renewable energy or energy efficiency systems or equipment at below market interest rates.

(Source: dsire.org)


State Rebates and GrantsRebates (44 states)� Offered by states, local governments and utilities to promote the

installation of renewable energy systems and energy efficiency measures. Often provide funding for solar water heating and/or photovoltaic (PV) systems.

Grants (27 states)� Primarily available to commercial, industrial, utility, education and � Primarily available to commercial, industrial, utility, education and

government sectors on a competitive basis. Most are designed to pay down the cost of eligible equipment, R&D, or project commercialization.

(Source: dsire.org)


Western Renewable Energy Zones

� Cooperative program of Western Governors Association and DOE

� Includes all 11 Western Interconnect states plus Alberta and British Columbia

� Goals: Generate reliable information and political support to � Goals: Generate reliable information and political support to facilitate the construction of utility scale renewable energy facilities and transmission across the Western Interconnection. Build

interstate cooperation to address major cost issues.

� Phase 1 Report finished June, 2009

(Source: WGA)


Presentation Overview: Part II

by Matthew Stamatoff

� Current Federal Policies Driving RE Market� ITC, PTC, P-ITC� Challenges of US RET Tax Incentives� American Recovery and Reinvestment Act

(ARRA) 2009

� Future Policy Developments (RES and Cap-and-Trade)� Bingaman Bill (Senate) � Waxman-Markey Bill, RES and Cap-and-Trade

(House)� Kerry-Boxer Bill, RES and Cap-and-Trade

(Senate)


Investment Tax Credit (ITC)

� Corporate income tax credit

� 30% for solar, fuel cells and small wind (100 kW or less)

� 10% for geothermal, microturbines (2 MW or less) and CHPMW or less) and CHP

� Maximum incentive for Fuel cells: $1,500 per 0.5 kW and Microturbines: $200 per kW

� Credits are available for systems placed in service on or before December 31, 2016 (extended by 8 yrs in 2008)


Production Tax Credit (PTC)

� Corporate income tax credit

� 2.1¢/kWh for wind, geothermal, closed-loop biomass

� 1.1¢/kWh Landfill Gas, Hydro-power, Municipal Solid Waste, Anaerobic Municipal Solid Waste, Anaerobic Digestion, Ocean energy tech

� Wind technologies must be installed before December 31, 2012, all other technologies must be before December 31, 2013

� In general, credits can be received for up to 10 years


PTC and Wind Sector Growth

Source of graph (above): American Wind Energy Association

(AWEA)Produced by Brooke Heaton and Matthew Stamatoff for the German Federal Ministry for the Environment, October 2009

Personal Income Tax Credit (P-ITC)

� 30% personal income tax credit for solar technologies, wind, fuel cells and geothermal

� Used to be a cap on credit, now there is � Used to be a cap on credit, now there is not a maximum credit (except for fuel cells $500 per .5 kW)

� ARRA 2009 removed the cap on credits


Challenges of US RET Tax Incentives

� Extending PTC and ITC� Uncertainty of extensions disrupts

market growth

� Accelerated wind deployment in 2008

� Small pool of Tax Equity Investors is getting smaller� Developers do not have profile to take

advantage of PTC or ITC

� Pool of Tax Equity Investors was 20 in 2008 and 6 in 20091

� Low tax appetite

1. Renewable Energy Project Financing: Impacts of Financial

Crisis and Federal Legislation (NREL, 2009)


American Recovery and Reinvestment Act (ARRA) 2009 & Tax Credits

� All eligible entities under the PTC, may now elect to take the ITC or receive a grant (ie. large-scale wind, anerobic digestion)

All eligible entities under the � All eligible entities under the ITC, may also elect to receive a grant

� Grant is a cash grant equivalent to 10% basis of property CHP, geothermal and microturbines. It is 30% cash grant for all other technologies.


ARRA 2009: Accelerated Depreciation & Loan Guarantees

� Extends bonus depreciation option

� 50% of project costs are depreciable in year 1; remaining 50% follows normal schedule

� Additional $6 billion for DOE loan guarantees

� Encourage debt financing in a credit tight market


Source of Graph (above):Renewable Energy Project Financing:

Impacts of Financial Crisis and Federal Legislation (NREL, July

2009)


American Recovery and Reinvestment Act (ARRA) 2009 & Energy Programs

� Department of Energy (DOE) received $36.7 billion for energy programs. This funding includes such programs as:

� Smart grid grant program ($4.5 � Smart grid grant program ($4.5 billion)

� Advanced battery manufacturing grants ($2 billion)

� Renewable energy loan guarantees ($6 billion)

� Expands weatherization program ($5 billion)

� Increases funding to State Energy Program ($3.1 billion)


S. 1462 American Clean Energy Act of 2009 (Sen. Bingaman, NM)

� Creates a Renewable Electricity Standard (RES) � Percentage of utilities electricity must

derive from energy efficiency or RE

� 3% in 2011-2013� 6% in 2014-2016

9% in 2017-2018 � 9% in 2017-2018 � 12% in 2019-2020� 15% in 2021-2039

� Energy efficiency credits can contribute to 26.67% of requirement

� Percentages are not as significant as they appear; exemptions from base for municipal solid waste and new nuclear. New hydro is eligible, old hydro is exempt


H.R. 2454: American Clean Energy and Security Act of 2009 (Rep. Waxman, CA and Rep. Markey, MA)

� Creates a Renewable Electricity Standard (RES) � Percentage of utilities electricity

must derive from energy efficiency or RE

� 6% in 2012-2013� 9.5% in 2014-2015� 13% in 2016-2017� 16.5% in 2018-2019� 20% in 2020-2039

RES targets are more aggressive thanS. 1462


� Amends Clean Air Act (CAA) to reduce GHG emissions by:

� 3% of 2005 levels by 2012� 17% by 2020� 42% by 2030� 83% by 2050

H.R. 2454: American Clean Energy and Security Act of 2009 (Rep. Waxman, CA and Rep. Markey, MA)

� Regulates emissions from electricity sources, industrial sources, fuel producers and importers and other relevant emitters

� Establishes annual tonnage limit on GHG

� Creates allowances equivalent to one ton of GHG

� Creates an auction for allowances, establishing a carbon trading


S. 1733 Clean Energy Jobs and American Power Act (Sen Kerry, MA and Sen Boxer, CA)

� Amends Clean Air Act (CAA) to reduce GHG emissions by:

� 3% of 2005 levels by 2012

20% by 2020*� 20% by 2020*

� 47% by 2030*

� 83% by 2050

*These target goals are more

aggressive than H.R. 2454


Current Status of the US Energy Bills

� S. 1462 (Sen. Bingaman):� Senate Committee on Energy and Natural

Resources recommended bill for consideration by Senate (vote 15-8 on June 17, 2009)

� Bill was placed on Senate Calender (No. 110)

� H.R. 2454 (Rep. Waxman, Rep. Markey)� Passed House on June 26, 2009� Roll call vote 219 Ayes, 212 Nays

� S. 1733 (Sen. Kerry, Sen. Boxer)� Senate Committee of Environment and Public

Works recommended bill for consideration by Senate as a whole

� Currently being debated by Senate Finance Committee

� Senator Webb (D-VA) and Senator Alexander (R-TN) Energy Act of 2009 recently introduced, Nov 2009


Thank you for your attention!

Vielen Dank für Ihre Aufmerksamkeit!

Kontaktinformationen

Matthew [email protected]

Brooke [email protected]

[email protected]


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