2013: A Cloudy Forecast for Renewable Energy, With a Silver Lining

So what’s the real forecast for wind and solar power?

That’s dependent—as it always is with the power sector, whether it’s renewable or fossil fuels—on policy. For the wind industry in the U.S., continuation of the tax credit would be vital. It pays wind-farm owners 2.2 cents per kilowatt-hour of electricity they produce over 10 years. If Congress fails to renew the tax credit, Bloomberg New Energy Finance predicts installations could fall by 88% next year to just 1.5 GW, at the cost of nearly 40,000 jobs according a study sponsored by the American Wind Energy Association (AWEA).

A quick check at the headlines will show how unlikely renewal is in the current political atmosphere. It’s so bad that the AWEA, in an effort to get fiscal conservatives on their side, this month proposed a six-year phaseout of the credit. But while a bill to renew the credit was passed by the Senate Finance Committee in August and is sponsored by a Republican—Senator Chuck Grassley of wind-rich Iowa—little has happened since, and producers are getting ready for the fallout. Already turbines makers have announced hundreds of layoffs.

As for the solar industry, the low costs for modules that have driven installation are a double-edged sword for manufacturers, who increasingly can’t make money off their products at current prices. That’s also led to something of a trade war—the U.S and Europe have charged Chinese solar manufacturers, with ample help from Beijing, of selling solar modules at below cost. The European Union opened up an anti-dumping investigation in September, and the U.S. slapped tariffs on Chinese solar panels. That might be good for domestic manufacturers, but a trade war would likely hold back global growth of solar power.

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