The proliferation of mechanisms and incentives in the renewable power market can obscure a fundamental fact – customers buying the product will accelerate the growth of the market by moving the industry down the learning curve to produce better products at lower prices over time. We accept this without question when it comes computers or flat-screen TVs. We don’t have that confidence when it comes to renewable power, and that is slowing the process.
A major reason for that lack of confidence is that the mechanisms driving those purchases are more intrusive for renewable power. When it comes to flat-screen TV’s we talk about early adopters and innovators. For renewable power, the conversation turns to renewable power standards (legislation and regulation) and tax credits (more legislation). At the end of the day, though, if those mechanisms drive customer adoption, the learning curve benefits will follow.
So it is important to look for those indicators of adoption as harbingers of progress down the learning curve. And there are some encouraging examples in recent months.
- In December, the state of Maryland committed to buy renewable power from four renewable energy projects – two onshore wind farms, an off-shore wind project and a solar project – to provide over 20% of the electricity needs for its state facilities and those of the University of Maryland.
- In November, Harvard University announced that it will purchase half of the electricity generated by a Maine wind farm (about 24 million kWh per year) to meet 10% of the electricity needs of its campuses in Cambridge and Allston.
- In November, the Mars Company and New Jersey based utility PSEG completed a 2 MW solar PV installation that will supply 20% of the peak electricity used by Mars plant that makes M&Ms.
Obviously, many more such transactions will be needed to truly move the market. But these transactions are useful indicators of progress in the renewable power market for several reasons:
- They are not token investments by the organizations – they represent a significant portion of electricity use.
- Three different large user sectors are represented – government, education and manufacturing.
- They are direct purchases of electricity supporting specific renewable energy projects.
As 2010 proceeds, tracking more such transactions will build a clearer and more definitive picture of the trajectory of progress.