April 26, 2001 -- Higher energy prices stemming from OPEC cutbacks in crude oil output or California's disastrous experiment with energy deregulation could have one positive result — they could hasten the day that clean, renewable energy is commercially competitive.
And that day could come within the next decade, say renewable energy advocates, as the declining price of electricity from "green" sources intersects with rising prices from conventional power plants.
Meanwhile, the market for clean power is getting a kick-start from 10 large companies, including IBM, General Motors, Kinko's and DuPont. The companies have joined an effort called the Green Power Market Development group to buy 1,000 megawatts of renewable energy, enough to power a mid-sized city.
The companies account for 8 percent of all electricity consumption in the United States.
A Hedge Against Higher Prices
"That creates a significant demand for new sources of renewable energy, considering it's just 10 companies," said Ben Paulos of the Energy Foundation, a San Franciso-based partnership of major foundations with an interest in sustainable energy.
The 1,000 megawatt goal represents 7 percent of their current demand, said Jennifer Finlay of the World Resources Institute. The Washington-based nonprofit is organizing the green power initiative in tandem with Business for Social Responsibility in San Francisco.
The goal is doable, but ambitious, Finlay said, given where the companies are with their energy planning.
A reason for her optimism is that corporations no longer make energy decisions solely on the basis of price. Big businesses see diversification of their energy supplies as a hedge against skyrocketing prices and scarce supplies, she said.
And the 10 companies in the network want to be seen as proactive on issues like climate change and energy use, she added, because shareholders and advocacy groups increasingly demand corporate practices that accommodate the environment.
"They want to on the cutting edge and push [green power] over the edge and into competitiveness," she said. "Renewables have public relations value, as well as clean air and climate benefits. So we're trying to come up with a model to monetize these benefits" to make it easier for the companies to justify purchases of energy powered by windmills, solar cells and other earth-friendly technologies.
Letting Consumers Shop Around
The technologies are proved but commercial development involves more than just harnessing the wind or tapping the sun. There are policy-makers to influence, regulators to satisfy and consumers to educate. Ultimately, the green power group's success in meeting its goal depends on whether renewable energy is available at a competitive price.
The trends are auspicious, supporters say. Natural gas prices have more than doubled in the past year while the cost of green power continues to come down as new sources are brought on line.
Deregulation is the most powerful trend working in green power's favor, said Paulos.
Deregulation generally opens the nation's electrical power grids to additional suppliers. This gives a jolt to a new breed of energy retailers that make their living off the ability of energy consumers to shop around.
Deregulation of energy markets has been embraced by a number of states, starting with California in 1996. The idea is to foster competition, or, as Paulos said, "get the Sprints of the energy world to come in an compete with the AT&Ts."
Green Mountain Energy Co. of Austin, Texas, for instance, is the nation's largest retailer of electricity from generated from the wind and the sun, with residential customers in Connecticut, California, Pennsylvania and New Jersey.
‘Wind Is the Star’
"Wind power is the star," said Paulos. Wind contributes 5,000 megawatts of electricity in the United States, only about 1 percent of all power production, according to the American Wind Energy Association. But wind is the fastest-growing source of electricity in the Great Plains, the Pacific Northwest and California. The association says 5 percent of the nation's electricity could be generated by wind turbines in 2020.
Abetting the development of wind power is a federal tax credit for owners of wind stations. With the credit, the wind has become another cash crop for farmers in windy Great Plains states willing to host turbines on a relatively small portion of their land.
"Wind power is growing at a rate of 30 percent a year," Paulos said. "It's suddenly a viable industry."
Supporters of green power worry the loss of the tax credit or a loss of faith in deregulation following California's debacle will derail clean energy development.
But deregulation has shown that, given the option, some consumers will choose clean energy, even when it's not the cheapest alternative. With major corporations gravitating toward that choice, green power supporters may have reason to be optimistic.