Thinking Tech

Government fills renewables funding void as demand for electricity drops

Posting in Energy

Energy is a sector where government is filling in gaps left by the private sector during slack demand for electricity. People beat up on government all the time, but the energy policy has finally started to turn in the right direction.

With the recession taking a nearly-unprecedented bite out electricity demand, concern is growing that gunshy investors will pull back on funding more power plants, wind and solar.

Fear not, the government is here to help. Really. I mean it. More on that in a bit.

The Dept. of Energy (DOE) forecasts that industrial demand will decline by 10 per cent in 2009 while retail consumption will drop 2.7 percent. The WSJ says the retail demand has dropped more steeply at 4.4 per cent  in the 13 states east of the Mississippi which makes up the biggest grid in the U.S. It's the worst electricity slump since 1950, so sayeth the WSJ (one wonders how much of a role the rainy summer has played in the northeast where air conditioners have been switched off until the past week).

And DOE predicts electricity consumption will grow a miniscule .8 per cent next year.

Last year, some of nation's energy seers were predicting electricity demand would jump four times in the coming decades as autombiles become predominantly electric. They described a kryptonite bolt of a planet sizzling, buzzing  and crackling with electricity.

It's nonsense.  The DOE tells the story saying, predicting demand growth will remain in the low single digits through 2030 as the impact of smart appliances, a modern grid and conservation take hold (see chart).

Slack demand for juice or or not, we are too far down the renewables path to turn back now. Thanks to the feds and state governments, renewables are being funded across via tax credits, stimulus dollars and other programs.

Check recovery.gov for specifics, but billions have already been doled out for wide smart meter implementation as well as auto battery research and manufacturing.  Some $43 billion of stimulus funds have been earmarked for energy projects such as rebuilding the aging grid. And 28 states plus DC have Renewable Portfolio Standards that require a percentage of electricity to come renewable sources. Tax credits encourage a quadrupling of wind energy over the next few years.

Even though oil is relatively cheap and plentiful, we know that situation could turn on a dime. Let's get off carbon! I give President Obama credit for having a Rooseveltian vision of future and the guts to pull it off.

Renewables and gas lead the way for additional electricity generation

While he gets hammered by the lunatic fringe in healthcare reform town meetings, has anyone given him a shred of credit for bringing us out of recession (granted, it's too early....jobs growth has to occur first)?

Think about if we were in the ninth year of a Bush presidency. I can't bear to.

Energy is a sector where government intervention is filling in gaps left by the private sector during  slack demand for electricity.  People beat up on the feds all the time, but  its energy policy has finally started to turn in the right direction.

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John Dodge

Contributing Editor

Contributing Editor John Dodge has written for the Wall Street Journal, Boston Globe, PC Week (now eWeek), EDN, Design News, Electronic Business, Bio-IT World, Health-IT World, Lowell Sun, Haverhill Gazette and Newburyport Daily News. He is based in Massachusetts. Follow him on Twitter. Disclosure