RIVERSIDE COUNTY, CA. March 3, 2015 - With oil prices around $50 a barrel, half last summer’s peak, is it game over for renewables? Not according to the National Bank of Abu Dhabi (NBAD). Alex Thursby, the bank’s CEO, sees major investment opportunities in renewable energy, including an opportunity for the Middle East’s oil exporting nations to deploy and export renewable energy technologies to “leapfrog developed economies.”
Introducing his bank’s 80-page “Financing the Future of Energy” report released March 1, Thursby concludes that in many places wind and solar power “are now competitive with hydrocarbon energy sources.” The report finds that “solar is on track to achieve grid parity in 80 percent of countries within the next two years, so cost is no longer a reason not to proceed with renewables.”
The NBAD report shows that after decades of leading the world in oil production, the Middle East now is positioning itself to lead the world in renewable energy while making “more oil and gas available for export.” The region appears to be following a strategy to keep its major customers such as the United States and Europe dependent on fossil fuels while the Middle East itself shifts its domestic energy production to renewables as rapidly as possible and becomes a world leader in exporting renewable energy technologies and equipment.
The NBAD report sees increasing demand for renewable energy based on these four drivers:
l “the looming gap in demand and supply that needs to be filled by significantly increased electricity generation;”
l “the challenge of managing finite or hard-to-reach (fossil fuel) resources;”
l “the desire of governments to secure local supplies and where possible to disconnect from the volatility of the oil price;”
l “plus policy frameworks worldwide that seek to decarbonize their economy in response to climate change and pollution concerns.”
Back in the U.S., the fossil fuel industry and its allies in Congress are fighting renewables through major efforts at both federal and state levels to roll back or repeal renewable energy programs such as the federal Renewable Fuel Standard and state Renewable Portfolio requirements.
In one example which echoes efforts in other states, Wisconsin’s Republican governor, Scott Walker, proposes to eliminate $8.1 million for a University of Wisconsin bioenergy program that was launched in 2007 with a grant from the George W. Bush administration. Wisconsin Energy Institute Director Michael Corradini warns that eliminating the state’s matching funds would risk losing $125 million in federal funding for the program due to noncompliance with the terms of the federal grant.
In California, however, momentum appears to be building rapidly for renewables.
Last month, Florida-based NextEra Energy Resources, the largest U.S. generator of renewable energy from wind and sun, officially launched its Desert Sunlight Solar Farm in a ceremony which brought U.S. Interior Secretary Sally Jewell and some 150 other government and business leaders to Desert Center, California.
“Solar projects like Desert Sunlight are helping create American jobs, develop domestic renewable energy and cut carbon pollution,” Jewell said at the ceremony. The federal Bureau of Land Management (BLM) notes that the solar farm is part of the Obama administration’s effort “to make a rapid and responsible move to large-scale production of renewable energy on public lands” and that the 550-megawatt (MW) solar farm will help California achieve its 33 percent Renewable Portfolio Standard requiring 15,000 to 20,000 MW of renewable energy by 2020.
Desert Sunlight’s financing was supported by a $1.5 billion federal loan guarantee and Jewell called the plant an example of how well the Energy Department’s loan program is working. Despite the much-publicized $535 million loan guarantee for solar-panel maker Solyndra which declared bankruptcy in 2011, the Energy Department expects a $5 billion to $6 billion net profit from its overall loan guarantee program.
As the world’s largest solar power generating facility at 550 MW, powering more than 160,000 homes, the 3,761 acre solar farm on BLM land has been steadily pumping renewable energy into the Southern California Edison regional grid since last September. (First Solar also built California’s Topaz solar project which like Desert Sunlight is a 550-MW facility. But the Desert Sunlight plant gets more sunshine than Topaz, so Desert Sunlight will generate the most electricity.)
Arizona-based First Solar built and now operates the Desert Sunlight photovoltaic (PV) plant, which uses over 8 million First Solar modules. The power generated is being provided to Pacific Gas & Electric and Southern California Edison under long-term contracts. The zero-emissions plant displaces some 300,000 metric tons of carbon dioxide annually, equal to removing more than 60,000 cars from the road.
Desert Sunlight’s impact on desert wildlife is offset by having the project provide more than 7,500 acres of enhanced habitat for desert tortoise and other sensitive species. The project’s total of nearly 11,500 acres comes out of 22.5 million acres of California desert that is under consideration for renewable energy projects.
Last week’s Resources for the Future (RFF) seminar on “Assessing Progress under California’s AB 32 Cap-and-Trade Program: Carbon Pollution Reductions and Economic Growth” provided further evidence of how California’s race to renewables has generated economic growth as well as solid public support and environmental benefits.
Tim O’Connor, the director of the Environmental Defense Fund’s (EDF’s) California Climate Initiative , said the state’s cap-and-trade program launched in January 2013 works with California’s suite of emissions reduction programs “to unleash a signal for innovation and investment that’s helping all the other complementary measures work better, work faster, and to deliver reductions more cheaply throughout the economy.”
Drawing from EDF’s Carbon Market California report released in January, O’Connor pointed out that in the two years since California launched its state cap-and-trade program, which limits carbon emissions, the state has led the U.S. in terms of job creation and GDP growth. He noted that for 2013 California’s GDP increased 2 percent while capped CO2 emissions decreased 4 percent, that from January 2013 to July 2014, California’s economy grew 3.3 percent while the rest of the U.S. grew 2.5 percent, and that California per capita personal income increased 8.5 percent between 2009 and 2013 while the rest of the U.S. increased by 5.9 percent.
EDF Associate Vice President Derek Walker added that recent polling shows that 75 percent of Californians support programs to combat global warming and that “they do not believe you have to trade economic growth for environmental protection.”
Also speaking in the RFF seminar, Ray Williams, PG&E’s long-term energy policy director, explained that the company, which serves 15 million customers, supports California’s economy-wide climate programs and believes that “Californians will be best served by a broad and flexible mix of clean-energy policies.” PG&E’s Vice President for Federal Affairs Melissa Lavinson added that California’s climate programs provide a head-start on meeting the emissions-reductions requirements of the Obama administration’s proposed Clean Power Plan due to be finalized in June.
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