Future uncertain for renewable energy investments

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Utilities are constantly struggling to make the best possible renewable energy investments to diversify their energy portfolio and maintain affordable and reliable electricity. Businesses are now getting in on the act, aiming to secure both on-site generation and renewable power purchase agreements to become more independent as energy demands rise. All of this, however, must be done with an eye on a regulatory process that is largely arcane and stifling.

A Walmart solar installation in Palm Desert. Credit: Walmart

Regulatory uncertainty persists

Approximately 38 states have comprehensive energy plans, including renewable portfolio standards designed to promote energy diversity. But even with mandates, there are still hang ups at the state and federal levels, not the least of which is uncertainty over financial incentives. Businesses have long lamented a lack of financial support and policy guidance from the government on renewable energy. And with the Federal renewable energy Production Tax Credit due to expire at the end of 2012, the task becomes even more difficult.

Regulators are working to try and open up the process, but progress is slow and changing procedures that have been in place for decades is not an easy task.

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Businesses have long lamented a lack of financial support and policy guidance from the government on renewable energy.  ___________________________

The Federal Energy Regulatory Commission has taken steps to encourage renewable energy production and, in June, approved a rule aimed at easing integration of variable energy sources into the transmission grid, including requiring transmission providers to offer customer options of scheduling service at 15-minute intervals and requiring generators using variable resources to provide power production forecasting data. The Environmental Protection Agency has taken a hard stance on coal generation and emissions, forcing renewables back into the spotlight.

But utilities and energy developers still point to regulation as one of the primary obstacles to widespread adoption and expansion of renewable energy technologies. This translates into businesses hesitating to outfit buildings with renewable technologies that are likely to be quite costly, especially as natural gas abundance continues to drive down overall electricity rates and make extra expenditures even tougher to justify.

"Who wants to complain about low wholesale energy prices?" asked David Ozment, Director of Energy for Walmart, at the October RETECH conference in Washington, D.C.  Walmart is working toward powering its stores with 100 percent renewable energy -- and is doing so without any mandate.

Creating renewable energy opportunity

"Our mission in life really is to eliminate the need for 'brown power' as much as possible," Ozment said.

Companies like Walmart, Ikea and others are just some of the business creating opportunities for utilities and business to take their own initiative on and find value in renewable energy. For example, the market for energy-efficiency retrofits on state public buildings sits at about $6 billion per year, according to David Terry, Executive Director of the National Association of State Energy Officials.

These projects include on-site power such as solar and geothermal heat pumps, all of which are built into long-term payback periods. This long-term view, however, poses problems for many businesses and utilities, who are more focused, first and foremost, on keeping the lights on.

"People are kind of hunkered down," Terry said, speaking at RETECH. He noted that the retail sector is "looking at their core function and trying to make sure that they are well positioned to weather the storm in energy."

Government and regulators too often stick to this view rather than focusing on getting starter projects off the ground. And even national retailers like Walmart have a hard time committing to standard 20-year power purchase agreements.

"We've got a roof on a building that will last 10 or 15 years, so expecting us to commit to 20 years is not a really good thing for us," Ozment said.