When Sheikhs invest in solar, you know a paradigm change has arrived. A slew of sun-drenched Middle Eastern states, prompted by the now-favorable economics of renewable energy, and a concomitant cloudy outlook for fossil fuels, are looking to transition their oil-heavy economies towards solar energy production. Closer to home, New York State Governor Andrew Cuomo too has a vision—expedited in no small part by the exigencies of climate change, economics & energy security—to secure a clean, affordable and resilient post-oil future.
Governor Cuomo’s Reforming the Energy Vision (REV) commits NY state to a Clean Energy Standard (CES) with the goal of meeting at least 50% of the state’s energy use with renewable sources such as solar, wind, hydropower and geothermal energy and reducing greenhouse gas emission levels from 1990 by 40% by 2030. This was prompted by the US Environmental Protection Agency’s (EPA) Clean Power Plan (CPP), which mandates a less stringent 32% reduction in carbon emissions from 2005 levels by 2030.
The pivot to renewables has many causes. First, cost is king and with renewables at least, cheaper is better. Advances in technology—cheaper, more efficient photovoltaic (PV) cells and wind turbines; souped up batteries to tide over times when the sun isn’t shining or the wind isn’t blowing—have brought down costs and increased reliability so much that the sector is competitive (as low as under $0.04/kWh) versus fossil fuels. Upfront investment costs are lowered by tax credits and net metering rules, which allows the sale of unused energy back to utilities to recoup expenses. Tax credits in particular were essential to the adoption of renewables, although the necessity of subsidies is receding as the industry is able to stand on its own merit. In December 2015, a divided Congress rallied to extend the 30% Investment Tax Credit (ITC) for solar energy & the 2.3-cent/kWh Production Tax Credit (PTC) for wind energy for five years (through 2020), among a slew of renewable subsidies, to ensure successful implementation of the CPP. On current form, the importance of such subsidies will diminish further as innovation continues to drive down costs and bring about mass adoption.
Second, climate change and environmental concerns lend an urgency to the transition to clean and low-carbon energy sources. Credit Hurricane Sandy for the harsh reminder that ocean levels are rising and reclaiming low-lying flood-prone land. The energy sector appears to be a zero-sum game with the rise of renewables occurring at the expense of the coal industry where a projected 50GW of capacity is expected to be lost by 2022 and, indeed, completely phased out in New York state. The upheavals of this energy revolution have being manifested in the rise of populist presidential candidate Donald Trump, fueled in part by the loss of jobs in America’s Rust Belt. Advocacy groups such as the Sierra Club and ardent environmental activists are also playing a significant role in the adoption of low-carbon fuels. The Sierra Club’s Beyond Coal Campaign organized a community-based push for off-shore wind energy investment with a Clean Energy rally in lower Manhattan followed by personal testimonies from state-wide attendees to the Public Service Commission. These efforts paid off in the adoption of a 90MW offshore wind project, the largest in the country, in federally leased waters off Montauk, in a tie-up between the New York Power Authority (NYPA), the Long Island Power Authority (LIPA) and Deepwater Wind, a private company. Moreover, the CES envisions establishing New York state as a clean energy powerhouse to safeguard the economic future of the state’s workforce by ensuring its technical expertise in the renewable energy sector. Slated to be one of the largest solar panel factories in the world, a 27-acre $750m SolarCity battery facility financed and constructed by New York state is another example of the economic thrust of the REV. The high-efficiency solar panels manufactured in the gigafactory produce electricity at a cost of roughly $2.5/W and production is expected to hit full capacity in late 2017.
The REV is expected to lower energy bills through localized power generation and distribution, furnish a greater choice of energy providers to reduce dependence on a central utility, advance net-zero energy efficient smart homes that can be controlled remotely, boost employment in the hi-tech renewables sector and improve overall quality of life from the greening of the energy industry.