As we enter a new year, a look at wind, gas, oil, solar, nuclear, and more help us prepare for the year ahead.
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Shale Gas
According to IHS Global Insight, the shale gas sector is looking at a positive 2012 and beyond. Not only are the numbers positive for 2012, but look good for the near future:
- Jobs – In 2010, the shale natural gas industry supported 600,000 jobs. The “IHS Global Insight” report projects growth to nearly 870,000 jobs in 2015, and to more than 1.6 million by 2035.
- Economic – Shale gas’ economic contribution is expanding rapidly, from $76 billion in 2010, to an estimated $118 billion by 2015 and $231 billion in 2035. The expectations is for nearly $1.9 billion in shale gas capital investments from 2010 to 2015.
- Energy – Production of shale gas, just 2% of total U.S. lower 48 production in 2000, grew to 27% last year. As of September 2011, shale gas accounted for 34% of total production and estimates are that by 2015, the share will increase to 43%, reaching 60% by 2035.
- Tax revenue – By 2035 shale gas production cont ributions to federal, state, and local governments will total more than $57 billion – more than triple the $18.6 billion contribution in 2010. Cumulatively, projection for the shale industry is for generation of more than $933 billion in tax and royalty revenues to governments during the next 25 years.
energyfromshale.org
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Challenges to the 2011 renewable energy market came from lower demand, oversupply of some components and products, and limited credit. This, together with increased manufacturing capacity and higher silicon supply, caused a sharp decline in solar module prices. In addition, the emergence of Chinese photovoltaic (PV) cell manufacturers, whom produce solar cells at a lower cost than American companies, caused a further decrease in solar panel prices. In response, it forced some American solar panel manufacturers to reduce prices, decrease margins, close some manufacturing facilities, or even declare bankruptcy – as was the case for Solyndra. Nevertheless, these challenges have not affected overall investment in solar energy.
On the one hand, there is still strong confidence in this industry. Although Google did reduce some of its renewable energy projects, overall, they and many other major global corporations continue investing in solar energy not only to boost their green credentials, but also to generate high returns for their companies.
On the other hand, lower solar module prices have helped reduce the price of solar energy, making solar more competitive with other forms of electricity generation.
Additionally, new financing methods, such as solar lease programs and power purchase agreements (PPAs), offered by companies such as Solar City, are diminishing the main barrier for solar systems installations. These barriers include a high up-front cost that tends to deter consumers, especially in the residential sector, from investing in solar systems. Moreover, Solar City addresses the complexity issue by providing a single point solution from engineering design to installation and government grant paperwork.
The emergence of the solar lease is projected to provide a greater impulse to the residential sector during the next few years. Solar City received great financial and strategic support from the partnership with Google in 2011, which led to the creation of a new $280 million fund to finance residential solar projects. It has also created 15 project funds with seven different partners to finance $1.28 billion of solar projects. In particular, Solar City has set an ambitious five-year plan, named SolarStrong, to install up to 300 megawatts (MW) of solar power on 120,000 military homes in the United States.
Solar PV has become, and will continue to be, the fastest growing technology in the U.S. energy industry during the next few years. According to Frost & Sullivan estimations, projections for cumulative PV solar installations in the United States are projected to reach more than 6,500MW in 2012. However, if Section 1603 of the Treasury Program is not extended past its expiration date set for the end of 2011 (it was not extended as of press time), the solar market (and other renewable energy markets) is projected to experience a decrease in investment as well as lower installation growth rates, especially by the second half of 2012.
As this market enters the maturity and consolidation phase, and pushes against several challenges, solar manufacturers should focus on improving technology while achieving economies of scale. Solar module prices are expected to further decline at a lower rate during the next year, making solar energy more affordable in the absence of subsidies.
Annual wind installations in the United States decreased by almost 50% in 2010 due to the economic crisis, as well as lower fuel and energy prices. However, the market show signs of recovery. In the first three quarters of 2011, the installation of 3,360MW of wind turbines were installed in the United States, up 74% compared to the same period of 2010. More than seven gigawatts (GW) of wind capacity should install in the United States in 2012 – a 20% increase with respect to 2011. This is fueled by the proximate expiration of the Loan Guarantee program, the production tax credit (PTC), and the investment tax credit (ITC), which are main drivers for the wind market.
The manufacturing sector in the United States is confident about the long–term prospects of the market. The slowdown that happened in 2010 is widely believed to exist only for the short term. Low entry barriers in the wind turbine market fuel companies to set up plants in the United States to address the domestic demand. It has been identified that domestic production of wind turbine components has increased 12 fold to approximately 400 manufacturing plants in the United States, serving almost 50% of the domestic market demand in 2011.
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Nuclear
History has shown that each major nuclear accident has caused a re-examination of the risks of nuclear power, leading to more stringent safety requirements and higher costs. The failures that led to the ongoing catastrophe at Fukushima are being scrutinized in the United States and other countries.
The nuclear reactor disaster at Fukushima will increase the cost and further undermine the economic viability of nuclear power in any country that conducts such a review.
The Japanese government has recently estimated that the cost of power from nuclear reactors will be 50% higher than estimated seven years ago, which is consistent with the impact of past accidents.
(As quoted in a paper presented by Mark Cooper, PhD, Senior Fellow for Economic Analysis, Institute for Energy and the Environment, Vermont Law School.)
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Regulations and policies are the key driving factors for the wind turbine market in the United States. However, lack of consistent policy for the renewable energy sector presents a significant challenge to the market. PTC, the federal subsidiary, offers investors and project developers 2.2 cents per kilowatt-hour (kWh) during a 10 year period, expiring at the end of 2012. The wind industry is strongly lobbying to push the expiration date to 2016.
Developers are rushing to complete projects before the expiration deadline, resulting in an acceleration of installations in the market, especially during the first and second quarters of 2012. If the tax credit is not extended, a major halt throughout the industry can be anticipated in the second half of 2012. Contracts and investments will be put on hold. The American Wind Energy Association (AWEA) estimates that annual installations of wind capacity will fall to 2GW from 8GW with no extension of the PTC. In addition, the association predicts a 37,000 job loss by 2013.
The American manufacturer is already witnessing slowdown in the new wind turbine orders due to the uncertain nature of PTC. On the other hand, a long-term extension of PTC would allow developers to plan more accurately for growth, giving manufacturers sufficient lead time to provide an ample amount of turbines to accommodate high demand. Further, job opportunities in the wind sector could grow to 95,000, and the investment in this sector could reach $16.3 billion in 2016 from expected $15.6 billion in 2012.
Overall, adoption of renewable energy technologies for power generation is likely to gain momentum during the next decade to help mitigate the harmful effects of global warming. As countries around the world strive to achieve self-sufficiency in energy supply and reduce emissions, renewable energy technologies, including solar and wind power, will likely receive further government support in the form of policies, subsidies and adoption incentives.
frost.com
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EIA-Predictions
 The predominant fuels for generation in the United States and Canada are expected to lose market share by 2035, although electricity generation capacity will continue to be added. Coal-fired generation will decline to 43% of the U.S. total, and hydropower will fall to 54% of Canadas total in 2035. In contrast, in Mexico/Chile, natural-gas-fired generation will increase from 48% of the total in 2008 to 58% in 2035.
Generation from renewable energy sources in the United States will increase in response to requirements in more than half of the 50 states for minimum renewable shares of electricity generation or capacity. Although renewable generation in 2035 in the “IEO2011” reference case is 17% lower than in last year’s outlook, the share of renewable-based generation is expected to grow to 14.3% by 2035.
In Canada, generation from natural gas is expected to increase by 3.8% per year through 2035, nuclear by 2.2% per year, hydroelectricity by 0.9% per year, and wind by 9.9% per year. Oil-fired generation and coal-fired generation, on the other hand, decline by 1.0% per year and 0.6% per year, respectively.
It is important to note that for this report, EIA’s predictions are based on U.S. federal subsidies for renewable generation expiring as enacted. If those subsidies extend, a larger increase in renewable generation would be expected, according to EIA.
eia.gov
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Coal
 In the absence of national policies and/or binding international agreements that would limit or reduce greenhouse gas emissions, projections for world coal consumption is to increase from 139 quadrillion Btu in 2008 to 209 quadrillion Btu in 2035, an average annual rate of 1.5%. Regional growth rates are uneven, with little growth in coal consumption in OECD nations, but robust growth in non-OECD nations, particularly among the Asian economies.
Strong economic growth and large domestic coal reserves in China and India lead to a substantial increase in their coal use for electric power and industrial processes. Installed coal-fired generating capacity in China nearly doubles from 2008 to 2035, and coal use in China’s industrial sector grows by 67%. The development of China’s electric power and industrial sectors will require not only large-scale infrastructure investments but also substantial investment in both coal mining and coal transportation infrastructure. In India, coal-fired generating capacity rises from 99GW in 2008 to 172GW in 2035, a 72% increase, while industrial sector coal use grows by 94%.
eia.gov
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