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Renewable Energy Market Faces Supply Crunch
Voluntary green power purchase programs, combined with renewable portfolio standards enacted by states is pinching the supply of renewable energy, according to a new report, a trend that could threaten the growth of the renewable electricity market.
According to the report from the National Renewable Energy Laboratory NREL, U.S. green power sales totaled 8.5 million MWh in 2005 and approximately 12 million MWh in 2006. The 2006 figure represents a three-fold increase from just three years earlier.
Meanwhile, 25 states and the District of Columbia have enacted renewable portfolio standards (RPS) requirements ranging from 2 percent to 30 percent of total electricity supply, to be achieved over the next five to 15 years.
However, U.S. non-hydro electricity generation provided only about 2.3 percent of the total U.S. electricity supply in 2005, according to NREL. And global demand for renewable energy equipment is already leading to supply shortages for wind turbines and photovoltaic modules, NREL says.
Growth in the voluntary green purchase market averaged 46 percent from 2003 to 2006, according to NREL, which projects that the market will grow by 35 percent annually from 2007 through 2010.
If the renewable energy market grows as predicted in the base scenario, demand from voluntary purchase programs, combined with the need to meet RPS standards, will lead to a supply shortage.
Under the base scenario, 4,000 MW of wind energy would be created annually through 2010. Boosting the addition of wind energy to 5,000 MW in 2007 and 2008; 6,000 MW in 2008 and 7,000 MW in 2009, would put demand and supply into balance, according to the report.
Keeping supply and demand balanced is key because if demand pushes costs too high, companies may cut back on voluntary purchases. Programs such as the EPA's Green Power Partnership, which encourages organizations to purchase green power as a way to reduce the environmental impacts associated with conventional electricity use, depend on an adequate domestic supply of renewable electricity at a reasonable cost, NREL says.