What is the single biggest misconception people have about renewable energy in the U.S.? And why do you think they have this misconception?
Very simply, the biggest misconception about renewable energy in the U.S. today is that it is failing.
Many people believe that cheap natural gas is crowding out the prospects for renewable-energy investment, that U.S. companies are largely destined for bankruptcy as Chinese players expand to dominate the market, and that the Department of Energy has lost an immense amount of money on its federal loan-guarantee program.
In reality, however, the outlook is much brighter. The market for renewable energy in the U.S. continues to grow rapidly alongside natural gas as a quickly increasing source for power generation. Solar power installations in 2013 are expected to be up 33 percent over 2012 and reach their highest level ever. Consumption of wind-powered energy was 21 percent higher in the first six months of 2013 than during the same period of 2012.
While there has been a shakeout of weak U.S. renewable-energy companies, others are thriving. U.S. solar manufacturer SunPower gained market share versus Chinese competitors in 2012. Innovative services businesses, such as solar installers, also are enjoying dramatic growth: share prices of SolarCity, for example, have tripled since the company’s initial public offering in early 2013. Project developers such as NRG have built strong pipelines of activity. And new players are popping up frequently. More than $500 million in venture capital was invested in clean-technology companies, including those in renewable energy, during the summer of 2013. Nearly all are based in the U.S.
What about those federal loans? Despite a few high-profile failures—including the infamous Solyndra debacle—the DoE currently is on track to recover 98 percent of the loans it made since 2009 to help renewable-energy startups commercialize their technologies.
In summary, the U.S. remains a healthy, competitive, and growing renewable-energy market. This growth will continue, driven by the need to meet existing mandates and falling costs that will make the energy more competitive with fossil fuels in the future. The creative destruction brought by market forces will continue, and some existing companies will fail. But new, innovative business models will continue to emerge.
Renewable energy is here to stay as part of the U.S.’s total energy mix.
This blog was originally published by the Wall Street Journal.