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
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.
Together, solar thermal systems and PVs could easily generate more than 10 percent of U.S. electricity by the end of the decade, and manufacturers of each contend that they could independently provide this portion given a return of government incentives and increased environmental regulation of conventional energy sources.
Geothermally generated power exceeds solar and wind power in current operating capacity. The Geothermal Energy Institute figures there are 2,700 MW installed in the United States (roughly equivalent to four or five conventional power plants) and nearly 6,000 MW worldwide. California again possesses the lion's share of U.S. capacity where geothermal supplies 7 percent of the state's electricity. After the U.S., the top producers of geothermal power are the Philippines, Mexico and Italy.
Other renewable power sources of note include biomass and hydroelectric. Biomass includes landfill gas projects and the burning of trash, wood and agricultural waste. All have considerable potential for further development. Large-scale hydroelectric accounts for 13 percent of U.S. electric capacity, but it is unlikely that any new projects will be permitted.
Hydrogen could be used for transportation and most other energy uses, including space heating. Hydrogen can be produced electrolytically, using solar electricity to split water molecules. Proponents say the current worldwide level of fossil fuel consumption could be produced by PV-generated hydrogen less than 2 percent of the world's desert area.
If oil prices stabilize at higher levels more investment will flow to renewable energy and conservation. But market forces are not enough to ensure proper valuation of all our natural resources. Environmental costs must be factored in.
Grant Ferrier is editor of the Environmental Business Journal, San Diego, Calif.