Forty dollars a barrel for crude oil is enough to make any consumer hopping mad. But consumers aren't the only ones jumping. Companies in alternative energy are set for a new wave of interest stimulated not only by increasing cost competitiveness but also by the environmental benefit of their sources of energy.
Cost has always been the key to the roller coaster business of alternative energy. Oil shocks in the '70s and subsequent
legislation and tax incentives designed to reduce dependence on foreign oil kick-started the renewable energy industries. However, the Reagan Administration removed financial incentives for companies and investors, contending that market forces should determine the best sources of energy. What remained unaccounted for in the equation, however, was the environmental costs of conventional energy generation.
Firms have been banking on the day when problems associated with producing power with fossil fuels, such as polluted air and hazardous waste, are included in the costs.
More aggressive air quality legislation is a step in the right direction, but there is a long way to go until renewable energy producers feel they are on an even playing field with fossil fuels.
Most renewable energy businesses have gone under in the past decade. The survivors, however, are well-positioned technically and from a business standpoint to contribute energy-caused environmental problems and America's impending third energy
crisis.
Photovoltaics (PVs), which use semiconductors to convert sunlight into electric current, could eventually meet 20 percent of the world's power needs, according to proponents. Technical improvements pushed down the cost of generating photovoltaic energy from $60/kilowatt-hour in 1970 to $1 in 1980. The cost is approaching 30 cents/kWh today. Although the average utility pays between 3 and 6 cents/kWh, PVs are already cost effective in remote locations.
Solar thermal systems, which concentrate sunlight to heat fluid in a sealed tube, have reduced power-generation costs from 24 cents/kWh in 1984 to 8 cents today. Thermal systems are geographically limited by their need for direct sunlight, but photovoltaics are not so constrained. A 12 percent efficient, 40-square-meter PV system in an area of average solar radiation in the U.S. would satisfy the electricity needs of a typical household.
