The subsidy game for fossil fuels

At midnight on New Year’s Day the Department of the Treasury’s Section 1603 cash grants program expired, dashing the hopes of those who have expressed legitimate concern that the end of various grants and tax credits will further devastate the embattled solar industry. And yet, when it comes to subsidies, support for fossil fuels continues to grow and nobody blinks an eye. While the reasons for this are many and complex, the impact is that we never know the true cost of power and fuel and that alternative energy has to compete on some uneven terrain.

Today in Cleantech

Time’s environmental reporter, Bryan Walsh, took a look at 2012 and the subsidy environment for renewable energy. Quite simply if the Production Tax Credit (PTC) is not renewed for wind power and if the Treasury Department’s section 1603 program, which gives cash grants to renewable energy projects, sunsets on December 31st, we’re headed for a rough couple years. A wind energy industry sponsored piece of research from Navigant Consulting (Navigant called the plunge in solar PV prices) says the industry will lose 37,000 jobs if the PTC expires. More problematic in my eyes is the difficulty of making renewable energy price competitive when the industry must constantly adjust to drastic shifts in the subsidy environment, particularly when wind and solar power are getting incrementally cheaper every year.

Today in Cleantech

Google has just taken another big dive into wind power, announcing this morning that it has committed to buy power for 20 years from an 100.8-megawatt wind farm to be built in Oklahoma. The power purchase agreement with NextEra Energy Resources is the second big wind power buy for Google Energy, the Internet search giant’s energy subsidiary. That differs from Google’s equity investments in wind and solar power projects including its $100 million stake in the 845-MW Shepherds Flat wind project in Oregon and its $168 million investment in BrightSource Energy’s 392-MW Ivanpah solar thermal power project in California’s Mojave Desert — but it’s an equally valid way to boost the development of renewable energy projects, since it guarantees sales of project power over a 20-year span. In the case of the Minco II wind facility in Oklahoma, to be completed in late 2011, the power will be going to Google’s Mayes County, Okla. data center, set to be up and running later this year. Google’s use of wind power for data centers is due to get it greenie points from Greenpeace, which this morning released a report card on big tech and Internet companies’ scores on how green their data centers are in terms of both efficiency and where they source their power. Facebook, which is building what it says will be a very efficient data center in Oregon, got a poor grade from Greenpeace because it’s being built in an area supplied primarily with coal power, for example.

Today in Cleantech

Startups may have raked in cleantech venture capital in the first quarter, but big renewable energy projects struggled to raise cash. Global clean energy investment fell to $31.1 billion in the first three months of this year, its lowest quarterly total in two years, Bloomberg New Energy Finance reported Friday. That’s down more than a third from a record $47.1 billion in the fourth quarter of 2010. While part of the big drop was due to a “hangover” from the record-high investments made in the last three months of 2010, it’s also based on some serious headwinds facing the industry. Solar power, for one, is being squeezed by an anticipated slowdown in feed-in tariffs and other government subsidies in big European markets such as Germany, Italy and the Czech Republic, and U.S. wind power projects have been hit hard by falling prices for natural gas, which hit lows not seen since 2002, the report stated. What were the bright spots? The report identified Brazilian and Chinese wind power projects, with China spending $10 billion, or 25 percent more than the first quarter of 2010, and Brazil doubling its wind investment to $2.1 billion compared to the same quarter last year. China remains the leader in clean energy investment, with a 39 percent increase in to hit a record $54.4 billion last year. That was enough to give China the lead over the U.S. in installed renewable energy capacity, as well as retain its spot as the top manufacturer of wind turbines and solar panels.