Renewable energy may be enduring a slump in some
segments this year, but the long-term outlook remains
bullish, according to one recent analysis.
The Q4 Volume ICF Integrated Energy Outlook from ICF
International was the subject of a recent webinar that
covered all the power generation resources and power
markets. The focus here is primarily on the renewables
Of course, the backdrop for all power market projections
are uncertainties on how one views natural gas prices
or whether CO2 will be regulated over the longer term,
said John Blaney, a managing director at ICF International.
But with regulations of other pollutants and the aging
of existing plants, "What we're seeing is that 60
gigawatts of coal capacity will retire by 2018," he
said. One implication for coal and renewable is that
unconventional gas will grow from 38 percent of the total
in 2009 to over 60 percent in 2030.
Renewable energy will prosper in this context, even
with the current pressures involving government policies
and the lack of carbon controls, ICF believes.
"We're continuing to expect renewable capacity
to grow rapidly in the near term, but it slows briefly
after the incentives expire. Despite the recent market
volatility - the huge buildup in 2009 and the slowdown
in 2010 -- we project that the U.S. will install just
over 51 gigawatts of renewables between 2011 and 2016
and 86 gigawatts between 2017 and 2030," he said.
In a year with strong federal support, 2009, wind added
10 gigawatts by itself.
Federal support was sustained over the short run, with
last-minute support in the tax bill. Even then, many
incentives for wind, solar and geothermal energy are
due to sunset over the next few years.
"The expiration of the federal incentives will
lead to diminished capacity additions in the window between
late 2010 and 2020 after the incentives expire and before
the CO2 prices and natural gas prices are high enough
to support renewable on their own," Blaney added.
Renewable energy is expected to become more competitive
as prices overall tend to rise and a carbon policy is
The impact will vary by region, particularly if capacity
is able to keep up with the demands of state renewable
portfolio standards (RPS).
"A similar pattern in seen in New England and the
PJM Interconnection, with renewable prices rising over
the next decade or so," he said. "But after
the build-out occurs and CO2 prices rise and gas prices
increase somewhat, the incremental revenues that renewable
need to be economic decline, so renewable energy credit
prices (REC) will decline accordingly."
Not so in California, which is already short of its
RPS targets. California utilities will see REC prices
start quite strongly, but once that build-out happens,
they will decline. "However, after those prices
decline around 2015, you'll see that additional renewable
requirements which are quite extensive will lead to recovery," he
All told, that seems like a pretty active two decades
for clean energy, despite the current uncertainty.