"RENEWABLE ENERGY IS A STRATEGIC SECTOR FOR US"
Despite the lack of a comprehensive national policy, many states within the US are becoming a hotbed for investments and project development of renewables. The state of Pennsylvania saw the potential early on and is rapidly becoming a market leader in this sector. Kathleen McGinty, the head of Pennsylvania‘s Environmental Protection, tells us why...
How is the renewable energy market progressing in the US? What role has the state of Pennsylvania had?
The renewable energy industry is evolving in the United States, despite the lack of a comprehensive national policy. Pennsylvania has established itself as a leader developing and deploying clean, advanced energy technologies, and is working aggressively to spur development among renewable energy industries, particularly solar.
Pennsylvania can boast a combination of factors that converge here to position us to be at the forefront of the rapidly growing solar market: progressive policies favorable to solar development, a strong manufacturing base, a wealth of investment capital, and a skilled workforce ready to meet the needs and expectations of growth-minded companies.
Pennsylvania has benefited from a substantial increase in renewable energy development since passing its Alternative Energy Portfolio Standards Act (see below) in 2004. The law--one of the most aggressive of the 29 states that have such a mandatory or voluntary requirement in place--requires that at least 18 percent of the retail electricity sold in the commonwealth come from advanced energy sources by 2021. Since Governor Edward G. Rendell signed this bill into law, Pennsylvania’s renewable energy industry has grown exponentially, and will continue to do so for the foreseeable future.
With completion of the Epuron project in southeastern Pennsylvania this fall, we’ll have more than 0.6 megawatt installed by the end of the year. And that’s just the beginning. Under the state’s renewable energy requirements, electricity from solar photovoltaics must account for one-half of 1 percent of all energy sold in Pennsylvania by 2021. This solar set-aside will result in the construction of at least 850 megawatts of new solar capacity; that will be an increase of more than 141,000 percent!
Nationally, solar energy production continues to grow at a phenomenal pace. The United States has increased its production by 45 percent in each of the last two years. The U.S. now has approximately 3,400 megawatts of installed capacity, comprising photovoltaic, concentrating solar power and solar thermal. Growth is expected to continue at this rate if the U.S. Congress extends the production tax credit, a matter now before the Senate.
Wind power is also experiencing substantial gains, and has taken an early lead in the U.S. renewable energy market. In 2007, wind capacity grew to 293 megawatts. Another 298 megawatts of capacity are expected to go online this year. The mandates in the state’s Alternative Energy Portfolio Standard law are expected to result in 3,000 to 4,000 megawatts of additional wind energy by 2021.
The same is true nationally. A report by the U.S. Department of Energy found that U.S. wind power capacity increased by 46 percent in 2007, with $9 billion invested in U.S. wind plants last year alone. That makes the United States the fastest-growing wind power market in the world for the third straight year. The report also showed that wind is on a path to becoming a significant contributor to the U.S. power mix--wind projects accounted for 35 percent of all new U.S. electric generating capacity in 2007. More than 200 gigawatts (or billion watts) of wind power are in various stages of development throughout the country.
What incentives have been made in Pennsylvania to stimulate investor interest in renewable energy development?
Renewable energy is a strategic sector for us. Governor Rendell realizes that using a greater use of renewables gives Pennsylvania and its companies a competitive advantage over other states; it provides an alternative to conventional fuel sources that are finite and increasingly expensive, it improves the quality of our environment, which helps cut down on the costs associated to pollution prevention requirements facing our industries; and it creates new business opportunities and new areas of employment for our workers, specifically in the manufacturing sector that has been hit so hard by outsourcing and foreign competition.
In order to attract the international leaders we have to the state, and to lure other potential businesses, we realized we had to provide some guarantees that the markets they serve would exist. That’s where the Alternative Energy Portfolio Standards Act comes in. By signing that bill in 2004, we created guaranteed markets for renewable energy producers. This is an approach that’s largely unique to Pennsylvania; many other states with renewable energy portfolio standards did not establish clear goals for different technologies, such as solar.
And because solar is still more expensive in relation to other energy sources, developing that technology faces more of a hurdle. Such is not the case in Pennsylvania. We have a clearly defined market for solar power, and companies that locate here will find the demand they need to succeed. It’s our requirements that has led the installed renewable capacity levels in Pennsylvania to grow so rapidly. Our success can also be measured in terms of sheer investment and employment figures. Because of our Alternative Energy Portfolio Standards Act, we have attracted more than $1 billion in economic growth in projects that have helped create about 3,000 new jobs in the solar, wind and biofuels industries and other areas that support these sectors.
Since taking office, not only has Governor Rendell led the charge on renewables, he’s also made investing in our economy a core principle of his administration. He leveraged a $2.8 billion economic stimulus package early in his administration to attract at least $5 billion in private sector investment in projects that expanded and improved our infrastructure, revitalized vacant brownfield properties, trained our workers to meet the challenges of the 21st century marketplace, and lured companies both large and small to the Keystone State.
How has the emerging renewable energy industry impacted the Pennsylvanian economy? How do you see it progressing in the future?
The Governor has been pushing the state’s legislature to adopt his plan to leverage $850 million to attract at least $3.5 billion in economic development tied to this industry. Governor Rendell’s Energy Independence Strategy would provide funding to develop solar, wind and other advanced energy industries, make it easier for consumers to purchase and install solar panels, continue the state’s leadership in energyefficient green buildings, and give consumers help in purchasing high-efficiency heating/cooling equipment and appliances.
Equipped with these new financial resources, we can leverage on existing strengths of our trained workforce to take us to the next level. Also working in our favor is the growing list of start-up companies engaged in renewable energy work and the existing manufacturers that offer a readymade network of suppliers.
While we pride ourselves as the new North American home of firms like Conergy, Iberdrola and Gamesa, equally as exciting are the smaller to mid-size firms that are either start-ups or companies in their early growth stage. We have businesses like AE Polysilicon that will soon begin producing the polysilicon material used for solar cells and modules that convert solar energy into electricity, Axion Power International, which is an industry leader in the development of advanced batteries and energy storage devices, and Solar Power Industries, who is poised to become one of the nation’s largest producers of low-cost solar cells.
We also have innovative companies like HydroGen, which is making advancements in the development of hydrogen fuel cells by using the hydrogen-rich gas from coke ovens used in the steel making process to develop advanced power sources.
Which renewable technologies hold the most promise in Pennsylvania?
Wind energy has been an early market leader in Pennsylvania, and this trend is expected to continue. The state expects to have approximately 600 megawatts of wind power capacity installed by the end of 2008 and up to 4,000 megawatts of wind energy for sale in Pennsylvania by 2021.
While solar power contributes less than 1 percent of the state’s current electricity demand, it is poised for tremendous growth as outlined earlier. Pennsylvania provides strategic and immediate access to the largest mandated solar photovoltaic market in the United States. Pennsylvania and surrounding states – Maryland, Delaware, New Jersey, and New York each have large solar photovoltaic requirements in their renewable portfolio standards. By 2021, Pennsylvania alone will contribute at least 850 additional megawatts.
What’s your plan to improve the transmission infrastructure in Pennsylvania to alleviate congestion? Do you see large-scale solar energy plants as a solution to this problem?
The responsibility and authority for improving the transmission infrastructure falls on the PJM Interconnection LLC, the federally regulated utility that manages the electricity grid in the area from New Jersey west to Chicago. PJM continually analyzes the transmission grid, searching for both potential threats to reliability and areas where the grid is unable to deliver reasonably priced electricity. When problems are identified, PJM has the authority to determine which grid upgrades are needed. PJM has the authority to direct the utilities that own the transmission system to build upgrades so that reliability threats are eliminated and reasonably priced electricity is available to consumers.
In the distribution portion of the grid, generally where customers take service from local utilities, the Pennsylvania Public Utilities Commission has the authority to require that electric service is safe and adequate. When the local distribution system is inadequate, local utilities have a clear responsibility to upgrade the system.
Large scale solar can play an important role in taking some of the pressure off the grid during periods of particularly high demand, such as hot summer days, when solar is producing the most. Reducing demand on the 100 hottest hours through a combination of solar, demand response and other renewable resources will help reduce pressure on the grid saving money across the whole system.
Would you like to see Pennsylvania have SREC (Solar Renewable Energy Credits) incentives as opposed to feedin tariffs? Why?
Pennsylvania established SREC (see rightside) purchases as the fundamental measure of portfolio act compliance with the initial passage of the Alternative Energy Portfolio Standards in 2004. The logic of SRECs is that the total cost to consumers of portfolio compliance will be as low as possible through the operation of market mechanisms. In order to avoid obstructing market development through pre-established price caps, the alternative compliance payment for SRECs is set at 200 percent of the prevailing market price. The commonwealth looks forward to the development of a robust market for SRECs as the industry expands to meet the demand caused by compliance requirements.
How would you characterize the awareness level of projects, like the Epuron/Exelon 3 MW plant in Morrisville, PA? What measures are being made to help raise awareness to further develop large-scale plants in your state?
Because Americans are increasingly concerned about rising energy costs, our environment, the threat of global warming, and the quality of the world that we leave to our children, innovative renewable energy projects like the Epuron/Exelon project are increasingly gaining the public’s interest. The public is coming to understand that renewable energy offers a clean alternative to the way in which fossil fuels have historically been used.
Since taking office in 2003, Governor Rendell has been a champion of these technologies. He and members of his administration have shined a spotlight on renewable energy project in communities across the state where the state has played a role in bringing to fruition.
Aside from hosting media events or participating in professional conferences and exhibitions, Pennsylvania is investing in large and small scale renewable energy projects. While the state invested $1.3 million in the Epuron-Exelon solar centers in Morrisville and Philadelphia, Pennsylvania has also supported demonstration projects that are helping to raise public awareness. Through various grant programs, the state has helped finance small-scale wind and solar systems that have been place in prominent, public locations across the commonwealth. These projects are helping to show the public that renewable energy technologies are not only available, but they’re also effective and viable.
As more of these projects get under way in Pennsylvania, and the media coverage that follows ensues, that level of public awareness will only increase, as will the level of public acceptance for these technologies as cost-effective alternatives. We have already seen an increased level of interest from companies and homeowners interested in adopting one or more of these alternatives. We expect that this level of interest will also increase once additional resources are available to incentivize the purchase of these technologies by residents and businesses.
