Note: this article is one of several feature stories in an issue titled "The Final Energy Frontier."
There’s never been a better time to worship the sun. As corporations realize that free energy is beaming to earth from space, there’s been a spike in demand for solar products, says Bernard Stuart, general manager of Albuquerque-based Matrix Solar. The company, a subsidiary of a French-owned manufacturer, employs about 30 people who churn out photovoltaic modules that produce electricity from the sun. "We’re in a crunch," he says. "In the past five to ten years, there has been massive change (in demand)."
Matrix is one of a number of businesses that may benefit from Albuquerque’s renewable energy initiative, which was passed by the city council in September. The initiative allows companies that produce renewable or energy-efficient products to issue bonds, and it gives them tax breaks, in an effort to attract them to the city. Other municipalities, states and the federal government are also offering manufacturers of renewable technology tax breaks, or even direct assistance.
With the recent price spikes for gasoline, electricity and home heating oil, consumers are searching for more reliable, cost-effective ways to heat their homes and power their refrigerators. And that means that technologies once thought fit only for wacky environmentalists are now becoming more popular — and much cheaper. Aside from making economic sense for customers, renewable energy technology could help revive the sluggish manufacturing sector, and pump money into local communities.
Ben Luce, the policy director for the Santa Fe-based Coalition for Clean Affordable Energy, says that the growing demand for clean energy — and the technology that creates it — is drawing investment money now that will make alternative sources even stronger: "The economy is very good at exploiting new opportunities."
The market, says Luce, is growing 30 to 40 percent per year. "There are lots of people trying to get in on the business right now," he says. "Ten years from now, it will be hard to compete."
Hundreds of miles north of Albuquerque, residents of Colorado’s Front Range are also reaping the financial rewards of renewables. Xcel Energy has passed the fluctuating price of natural gas on to its customers. But by opting into the company’s Windsource plan — which used to cost an extra $6 each month — Coloradans are now saving about $4 a month.
The federal government gives utilities an economic incentive to tap into wind power with a "production tax credit," providing a 1.8 cent per kilowatt hour credit over a wind farm’s first 10 years. Congress created the credit in 1992, and recently renewed it until 2007.
The industry does have its fair share of obstacles to work through, partly because the market is growing so fast. European wind-turbine manufacturers — which have long led the field and currently make 80 percent of the world’s turbines — are struggling to keep up with worldwide demand; the backlog for orders now stretches past 2007. And because the price of steel has risen over the past two years, due in part to high demand from China and the energy costs of processing the metal, contracts for new wind farms have actually been cancelled. Earlier this year in Colorado, Prairie Wind Energy nixed a 69-megawatt wind project, even as demand from consumers rose.
Solar panel manufacturers face similar problems. "The demand is there," says Matrix Solar’s Stuart. "We just can’t get the raw material." Stuart says the photovoltaic industry competes with the rest of the electronics industry for refined silicon, a product made by only seven manufacturers worldwide. And international demand is squeezing supplies, as well: Government incentives in Germany are causing a rush on the market, as is demand from developing countries such as China and India.
There are other obstacles, as well. The two most common problems, say those within the industry, are transmission and storage. Currently, for example, there’s no way to effectively store wind power when the wind isn’t blowing. And most wind farms — along with biomass facilities, which generate electricity by burning small-diameter trees — are built in rural areas, far from existing transmission lines. Scientists are experimenting with ways to store wind-generated electricity using different types of batteries, or hydrogen fuel cells.
In New Mexico, Gov. Bill Richardson, who was secretary of Energy under President Clinton, is trying to address those problems. New Mexico has abundant wind, solar and geothermal resources, and is looking to move some of that energy out of state.
"New Mexico has 4,000 to 6,000 megawatts of economically competitive wind power that’s not getting to market because of transmission," says Ned Farquhar, the governor’s energy policy advisor. On the remote eastern plains of the state, there simply isn’t the infrastructure to move electricity. But during the next legislative session, the governor plans to ask lawmakers to create a Renewable Energy Transmission and Storage Authority to tackle the problem.
New Mexico is ahead of the curve. Thanks to the federal tax credit for wind projects, PNM, an Albuquerque-based utility that sells electricity and natural gas to about a half-million customers, signed onto a wind farm in eastern New Mexico in 2002. Because of the federal credit, says Mike D’Antonio, PNM’s director of resource planning, "wind came in at a very attractive cost, about three cents per kilowatt hour." Today, out of PNM’s 1,700 megawatt system, 204 megawatts are from wind — far surpassing the state’s wind-power requirements. Now, the utility is working on how to meet the state’s diversity requirement: It’s considering building two solar facilities, and looking into geothermal and biomass.
Other Western states have set their own goals for renewable energy, but some, such as Arizona and Nevada, are floundering (HCN, 5/2/05: The Winds of Change). And even in New Mexico, working renewables into the energy mix is not simple, largely because they can’t provide the consistent, dependable power supply that, say, coal does. "PNM is very pro-renewable, but it’s not the total answer to our future supply needs," says D’Antonio. "There needs to be a balance: coal, natural gas, renewables, and we’re even looking at nuclear." When the wind blows, PNM can back off its coal-fired power plants. But when it doesn’t, coal remains the steady supplier. "Price is one aspect," says D’Antonio, "but reliability is more important."
Nonetheless, increasing reliance on renewables will undoubtedly lead to "absolute price stability" in the long run, says Craig Cox, executive director of the Interwest Energy Alliance, a wind trade association. Fossil fuel prices are notorious for fluctuating wildly, while renewable costs are much more stable. "I can tell you what the price of wind will be in 20 years," says Cox. "Wind provides a tremendous hedge against price spikes."
Cox says there also needs to be more investment in transmission lines to bring renewable energy to market. That might be a tough sell for wary investors, but it’s worth it: "Thirty years ago, (utilities) were not using natural gas, and now it’s a major component," he says. "We can make the shift to wind in a similar time frame."
Laura Paskus is Southwest editor for High Country News.