Looking back at 2012, one thing is certain in the sea of the year’s uncertainty; renewable energy experienced significant growth. The U.S. solar industry grew at a rate of 13.2%. A global oversupply of solar panels lowered prices for American consumers, resulting in higher demand and greater profits for solar installation companies. SolarCity’s IPO proved to be successful despite claims that its stock would immediately plummet. And even with excessive political attacks by opponents of renewable energy – over $250 million spent in the 2012 election – the industry has gained strong public support across the country. Industries such as wind, biofuels, geothermal, hydropower, electric transportation, and solar have achieved success in 2012 but the next step in supporting growth is creating a more stable policy landscape.
Creating a stable policy landscape should start with an extension of the Production Tax Credit (PTC), which expires at the end of 2012. The PTC has been very effective in bringing wind energy and other renewable energy sources to scale, unlocking billions of dollars in private investment for wind energy. It encouraged the development of almost 4 GW of wind energy in the first ten months of 2012 alone. The PTC has also contributed to a 38% drop in project development costs for wind farms in the past four years. In order to continue the strong trajectory the industry is on, an extension of the PTC for 2013 and beyond is needed, albeit with an appropriate timeline for a phaseout.
Adopting legislation to qualify renewables as Master Limited Partnerships (MLPs) would also attract additional capital into renewable energy development. According to Secretary Chu of the Department of Energy, if MLP legislation is signed into law and renewable energy is considered a “qualified” energy source under MLP legislation, there will be a significant increase in investments in renewable energy development. Furthermore, it will create a stable financial landscape for both small and large-scale investors who wish to enter the market. Senator Chris Coons of Delaware has proposed MLP legislation for renewable energy and his legislation may see bipartisan support in the early months of 2013.
Every year critics of renewable energy seem to get louder even as the prices of electricity generated from renewable sources decrease. Although 2012 was an election year and political attacks were targeted at renewable energy, the industry braved the storm. The business case for renewable energy has gotten stronger in 2012 and will continue to do so – even if there are some bumps on the horizon.
Now more than ever, the potential, production, and capacity for renewable energy are enormous, but with sound energy policy the potential is exponentially greater. Political gridlock is looming in 2013. The year may not start the way anybody wants it to but it still has the potential to end on a very high note for American renewable energy.
Noah Ginsberg is a Communications Associate for ACORE.