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Scaling Green’s Ten Top Cleantech Stories of 2014

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Cross posted from Scaling Green



The following are ten top cleantech stories we followed closely in 2014. Of course, this is not a comprehensive list, as there’s so much happening in the vast world of cleantech. Still, we think the following are fascinating, important stories well worth noting as 2014 comes to a close.

First, courtesy of Greentech Media’s “The Energy Gang” podcast (with “energy futurist Jigar Shah, energy policy expert Katherine Hamilton and Greentech Media Editor Stephen Lacey”):

1. According to Katherine Hamilton, the EPA’s Clean Power Plan – “the draft 111(d) greenhouse gas rule that came out last summer…is absolutely the biggest story of the year…I think it’s going to have enormous ramifications for years and years to come.” We agree, as the Clean Power Plan will stimulate innovation at the state level in energy efficiency, wind and solar power, energy policy, and more. It also will make it even less likely that new coal-fired power capacity will come online, although that was already the case due to competition from renewables, natural gas, and energy efficiency.

2. According to Jigar Shah, “dirt cheap solar” is the top story of 2014, complentary to the EPA Clean Power Plan story. In Shah’s view, Austin Energy switching to solar power, because it cost less than 5 cents per kilowatthour, “sent shockwaves throughout the industry,” with “a lot of utility executives, as well as Lazard and others” concluded that “solar is here, it is finally deserving of your respect and you must pay attention to it,” and the Austin Energy story was a “bellwether.” Shah further argues that the drop in solar prices – along with other good, cleantech news – will make 111(d) much easier to achieve and a “lot less costly than people think it’s going to be to implement.” Synergy, anyone?

2a. Stephen Lacey notes that there are now many “utility-scale {solar power} contracts being signed outside of Renewable Portfolio Standards – in Colorado, in Utah, in Georgia, coming up in Mississippi – we are seeing prices that are competitive with natural gas, and utilities are finding that solar is the cheapest resource and they’re not doing it because of mandates.” We’d also point everyone to this recent New York Times story, which reports: “The cost of providing electricity from wind and solar power plants has plummeted over the last five years, so much so that in some markets renewable generation is now cheaper than coal or natural gas.” That includes places like Oklahoma, where “American Electric Power ended up tripling the amount of wind power it had originally sought after seeing how low the bids came in last year.” And, “{a}ccording to the Solar Energy Industries Association, the main trade group, the price of electricity sold to utilities under long-term contracts from large-scale solar projects has fallen by more than 70 percent since 2008, especially in the Southwest.” The bottom line is that, increasingly, solar and wind power are competing with fossil fuels purely on economics, not even counting the massive subsidies fossil fuels receives, or the adverse impacts on health and the environment fossil fuels are not forced to incorporate into the pricing of their products.

4. Lacey nominates Germany’s energy transition as “one of the most important stories of the year, for mixed reasons.” Why? Because “the perceived and the very real negatives in Germany have started to have a deeper impact on the way people are talking about the country in the U.S…I think fewer and fewer people are pointing to [Germany] and saying we need to be like them…There’s a lot of good coming out of Germany this year as well; the country has embarked on subsidy reform, and nearly everyone in politics…agrees that clean energy should be a top priority…It’s also one of the test beds for solar plus storage, along with Australia, potentially Hawaii and Italy…And then finally, of course, this year saw historic changes to utilities, stimulated by the turmoil in the country’s energy markets: EoN is divesting from fossil fuels and focusing on customer-centric distributed renewables; RWE, the second- biggest utility there, is developing a similar plan.”

5. Moving on from the “Energy Gang” crew, we nominate China as one of the top cleantech stories of the year, for a number of reasons.  First and foremost was the U.S.-China agreement to limit carbon emissions, announced on November 12 by Presidents Barack Obama and Xi Jinping. As Triple Pundit explains, this agreement “has China committing to reach peak carbon by 2030, with emission declining after that date,” with Chinese President Xi Jinping saying “that clean energy sources such as solar and wind would constitute 20 percent of China’s total energy production by 2030.”  Then, on December 17, BloombergBusinessweek reported that “China’s use of coal is ‘very likely to peak before 2020,’ [according to] a report from the National Bureau of Asian Research (NBR), an independent think tank based in Washington and Seattle.” According to Thomson Reuters Point Carbon analysis, this goal would require Chian “to increase its total energy production from nuclear and renewables 10 percent per year until 2020,” with the country adding “a total of 800-1,000 GW of non-fossil power plants” by 2030. To put those numbers into perspective, total U.S. power generating capacity is just over 1,000 GW. So, obviously, if China adds that much non-fossil generating capacity by 2030, it would be huge — for itself, as well as for world energy markets and carbon emissions.

6.  Another important cleantech-related story in 2014 was that, as InsideClimate News put it: “Riding a Rocket, Divestment Movement Gains Momentum.”  This movement — fueled by the “growing belief among global leaders, investors, scientists, and large corporations that the use of fossil fuels must be sharply curtailed-if not phased out-for the sake of future generations” – poses a potentially powerful threat to the fossil fuel industry. As InsideClimate News notes, the fossil fuel divestment movement started a few years ago “with a handful of U.S. colleges, with students pressuring administrators to purge endowment funds of coal, oil and natural gas company stocks.” As of September 2014, “the number of commitments had more than doubled to 181 entities and 650 individuals with control over about $50 billion in total assets, according to a report from Arabella Advisors, a Washington, D.C.-based consultant to philanthropies.” That’s impressive, especially if it continues to grow during 2015 and beyond.

7. On a related note, as Bloomberg explained earlier this month, “A growing minority of investors and regulators are probing the possibility that untapped deposits of oil, gas and coal — valued at trillions of dollars globally — could become stranded assets as governments adopt stricter climate change policies.” Bloomberg adds: “The concept gaining traction from Wall Street to the City of London is simple. Limits on emissions of carbon dioxide will be necessary to hold temperature increases to 2 degrees Celsius, the maximum climate scientists say is advisable. Without technologies to capture the waste gases from combusting fossil fuels, a majority of known oil, gas and coal deposits would have to stay underground. Once that point is reached, they become stranded.” How serious is this threat? One indication is that, as The Guardian reported recently, the Bank of England “is to conduct an enquiry into the risk of fossil fuel companies causing a major economic crash if future climate change rules render their coal, oil and gas assets worthless.”

8. Another factor in potentially “stranding” fossil fuels is the rise of energy storage technology and electric vehicles, as exemplified by this story: “Nevada hit the jackpot yesterday in a five-state bid to host Tesla Motors Inc.’s $5 billion battery factory, which could help achieve a mass market for low-emissions electric vehicles by the end of the decade.” As Bloomberg reports, this “gigafactory may soon become an existential threat to the 100-year-old utility business model,” as it will “churn out stationary battery packs that can be paired with rooftop solar panels to store power.” As Amory Lovins of the Rocky Mountain Institute explains: “‘The mortal threat that ever cheaper on-site renewables pose’ comes from systems that include storage…That is an unregulated product you can buy at Home Depot that leaves the old business model with no place to hide.”

9. The collapse in oil prices we’ve seen in 2014 has implications in many ways for energy markets of all types, including cleantech. For instance, see Bankers See $1 Trillion of Zombie Investments Stranded in the Oil Fields, which reports on a Goldman Sachs analysis which “found [oil] projects representing $930 billion of future investment that are no longer profitable with Brent crude at $70.” That includes “expensive Arctic oil, deepwater-drilling regions and tar sands from Canada to Venezuela.” But what about low oil prices’ impact on cleantech?  So far at least, the cleantech sector doesn’t appear particularly concerned. As The Guardian wrote recently:

…when it comes to electricity, oil and renewables hardly mix at all anymore. That’s because diesel and other petroleum-based fuels account for only 5% of global power generation today, according to the International Energy Agency, compared to a full quarter piece of the pie in 1973. Diesel is even less relevant in US power markets, where it makes up only 1% of generation.

“As far as solar and wind go, the {impact} from lower oil prices is zero in North America and Europe, where power prices do not have any link to oil,” said Pavel Molchanov, a senior research analyst at Raymond James Financial, in an email.

In addition, “Marc van Gerven, vice president of global strategic marketing at rival First Solar, said in an email that solar can provide a competitive advantage over diesel, coal or natural gas because fossil-fuel prices, even if low at this moment, have proven to be quite volatile over time.” Finally, a “recent energy cost analysis by Lazard not only backs up these views on oil’s diminutive impact on renewables. It goes further in calculating that the cost of energy from new utility-scale solar and wind power plants is increasingly competitive with more relevant conventional electricity fuels like coal, natural gas and nuclear power, even without subsidies in some markets.” So, we’ll definitely be keeping an eye on oil prices in 2015, and specifically how they might impact clean energy markets. For now, though, the adverse impact of plummeting oil prices appears to be focused mostly on expensive oil projects, like Canadian tar sands. And frankly, that’s fine with us.

10. Last but not least, since we’re located in the Washington, DC area, we’d be remiss not to look at Congress, politics, and their impact (actual and potential) on U.S. energy policy. For instance, see Why Congress’ Momentary Extension Of A Wind Tax Credit Isn’t Worth ‘A Carton Of Eggs’, which explains that the two-week extension of the production tax credit (PTC) threatens to continue the “‘boom and bust’ cycle in wind capacity installations, as the industry ramps up to take advantage of the credit before an expiration, and then collapses when further extensions become politically uncertain.” This is emblematic of the many ways in which our political system tilts the playing field in favor of fossil fuels. And it’s not coincidence, either; as this new analysis finds, the fossil-fuel industry directly invested $721 million-and perhaps hundreds of millions of dollars more through contributions to outside groups-in order to secure a Congress of its choosing and a friendly energy agenda… in the two years leading up to the November 2014 elections.” The fossil fuel industry’s efforts at influencing energy policy extend to the state level as well, and will most definitely be worth watching in 2015 and beyond.