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March 5, 2002

Kickstarting the renewable energy industry

Dear GENI Friend,

Many years ago, I was meeting with the President of a large windpower company and he used the phrase power purchase agreement. Little did I understand how critical this is in the development of this industry. At another conference, two leaders in the field suggested that government buy-downs would help accelerate the renewable energy development.

Large energy development is one of the most capital-intensive industries, requiring major investments with multi-year payback periods. It is usually the domain of global energy giants, Wall Street and the international development banks. However, governments can play a vital role by offering tax credits and become the initial customers of the new technology.

For example, we now all benefit from the Internet. Twenty years ago, it's origins were born from the U.S. DARPA(Defense Advanced Research Procurement Agency), which wanted an electronic communications system for the government in case of war. Then, universities became involved to facilitate research exchange between energy and weapons laboratories. This early file transfer protocol gave birth to the widespread public use of the Internet. But, the first customer was the United States government.

Governments act on our behalf, working for the common good. They can contract for services in new industries, providing a kickstart to more desirable infrastructure. Federal, state and local governments have the ability to make large purchase commitments — and thus help drive down costs as manufacturing scales up. Then you see the entrepreneurs jump in.

We invite you to encourage your government officials to make a strong commitment to renewable energy (Pg. 3, Figure 6-1). Ask them to support tax incentives for renewable energy development, and suggest that they write power purchase agreements with competing wind, solar, geothermal and biomass developers. This will accelerate what we all want — a more sustainable future for all.

In partnership for the planet

Peter Meisen

Keywords: kickstarting the renewable energy industry, power purchase agreement, government buy-downs, government, sustainable development, global energy network institute

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