The U.S. Energy Information Administration (EIA) recently released its projections for the U.S. energy sector in their Annual Short-term Energy Outlook report. As of 2014, renewable energy sources (hydropower, wind energy, biomass wood, biomass waste, geothermal, and solar energy) made up about 13% of the U.S. energy sources, with nearly half of that percentage (48%) coming from hydro. According to the Outlook report, EIA expects total renewable useage by the power sector to increase by 8.1% in 2016.
The development of renewable energy technologies, particularly solar and wind energy technologies, have been aided by federal policy incentives aimed at integrating renewables into the U.S. electric grid. Currently, California leads the country in installed solar capacity (solar photovoltaic – PV – panels and solar thermal technology), while Texas leads in generated wind power.
Federal initiatives aimed at developing and deploying renewable technologies are integrated in the Energy Policy Act of 2005, the Energy Independence and Security Act of 2007, and the American Recovery and Reinvestment Act of 2009. A recent addition to the Clean Air Act under Section 111(d), known as the Clean Power Plan, provides a policy framework for states to increase their power production from renewable sources.
The Energy Policy Act of 2005 authorized loan guarantees for the innovation and development of clean power technologies, and increased the required percentage of biofuels used in ethanol production. The Energy Independence and Security Act established a Renewable Fuel Standard, directing the Environmental Protection Agency to monitor that fuel used for domestic transportation contained a specified volume of renewable fuel, advanced biofuel, cellulosic biofuel, and biomass-based diesel.
The federal policies above allow for individual states to choose how to implement them. These policies include:
The tax credits for solar and wind producers have been consistently renewed prior to their expiration dates. In December 2015, an extension of these federal tax credits was re-approved by Congress for solar and wind technology. Production tax credits for wind plants starting construction were extended until 2019, with credit value declining over a ten year time period. Investment tax credits are at 30% for solar plants starting construction, and are eligible until 2019. (See DOE’s page on Renewable Electricity PTCs.)
The policy incentives currently in place at the state and federal levels aim to increase long-run competitiveness of renewable energy technologies. While the Short-term Energy Outlook projects an increase in electricity generated from renewable sources, uncertainty lingers on the effect of clean energy policies on carbon emissions in the upcoming years. Hopefully, the extension of the tax credits give the emerging technologies the time they need to successfully enter the energy market.