By Bradford Pete-Hill In the last decade, the advancement of the renewable energy industry in the United States has depended primarily on the efforts of product manufacturers and environmental groups. They have used in-house marketing and outreach programs to gain the public’s interest in renewable energy and to explain the benefits of clean technologies. However, in order for the renewable energy industry to further its market expansion in the U.S., it should transition from self-promoting programs to those that employ and rely on state and regional electric utility1 companies for more substantial growth.
There are more than 3,273 electric utilities serving over 142 million customers in the United States, according to the Energy Information Administration. Electric utilities have the unique ability to rapidly expand the use of renewable energy due to their capacity to reach existing electricity consumers without expending exorbitant amounts of capital and resources. In the next ten years, electric utilities could directly determine the success of grid and off-grid renewable technologies through consumer marketing efforts such as "green" and "distributed energy" programs. Grid systems employ electricity generated by a utility for public use such as coal-fired power plants and wind farms. Residential solar panels and water heaters are examples of off-grid systems that utilize electricity generated by the consumer for personal use.
Electric utilities have increasingly promoted the use of grid renewable-generated electricity through green programs. Upon enrollment in a green program, the customer pays an additional monthly fee to ensure their electricity is being generated from renewable energy. The higher premium allows electric utilities to cover the additional costs associated with supplying electricity from a renewable source. In many cases, these programs were created to aid electric utilities in meeting state and regional renewable energy standards but have since become increasingly popular with green-conscious consumers.
Due to the growing demand, many utilities have sold their entire megawatt output of renewable-derived electricity and are being forced to expand their renewable energy infrastructure to accommodate the influx of consumers wanting to enroll in green programs. The increased interest has resulted in the additional purchase and installation of such renewable energy generating technologies as solar thermal, geothermal, and wind energy to keep pace with the growing demand of existing programs.
As more consumers enroll in green programs, they will continue to gain popularity and compel electric utilities to invest in current renewable sources, as well as spur the research and development of new clean technologies such as off-shore wind and tidal energy. The investment of electric utilities in renewable energy has allowed the industry to continue to grow and expand into markets that were previously thought to be unattainable. Furthermore, as electric utilities increase their investment in renewable energy, electricity generation and consumption in this country could evolve from a reliance on fossil fuels to a trust in clean energy.
Electric utilities could also determine the rate of expansion of off-grid renewable energy products. Distributed energy programs, sponsored by many utilities, provide for the purchase and/or lease and installation of solar panels, solar water heaters, and wind turbines for both residential and commercial applications. These programs are partially subsidized by both the utilities offering rebates and the state and federal governments offering tax credits, which amounts to about half the cost of the equipment and installation for the consumer. Though the process can be technical, the programs serve as facilitators between the consumer and the government, guiding each entity through a simplified plan in which the majority of the complexities are left to the utility. As the number of electric utility customers grows and the cost of off-grid renewable energy products decrease, consumers and developers may be more likely to install the systems in existing and newly constructed homes, further expanding the renewable energy market.
The renewable energy industry, through its innovation, enthusiasm, and ingenuity, has the potential to transform the nation’s energy landscape from a carbon dioxide-emitting giant to a climate impact mitigating, efficient, and modern generator of electricity. However, without engaging electric utilities, the industry may have difficulty expanding and thriving in a market dominated by fossil fuel generation. The renewable energy industry should form a mutually beneficial partnership with electric utility companies in order to increase its presence and share within the energy market. The importance of creating and maintaining this collaboration not only impacts the energy industry and market, but the living standards of future generations as well.
1 An electric utility is defined as any entity that generates, transmits, or distributes electricity and recovers the cost of its generation, transmission or distribution assets and operations, either directly or indirectly, through cost-based rates set by a separate regulatory authority (e.g. Arizona Public Service, Salt River Project, Duke Energy).
Bradford Pete-Hill earned his bachelors’ degrees in Political Science and History in 2007, and a master’s in Justice Studies in 2009 from Arizona State University. In his graduate studies, Bradford concentrated on energy law and policy in which he examined cap-and-trade market systems, public utility rates, oil and gas regulation, renewable energy policy, and the evolution and transformation of energy markets and the populations they affect. He served in the Director’s Office at the Arizona Department of Environmental Quality working on the Western Climate Initiative, a regional cap-and-trade program between the western United States and Canadian provinces. Bradford’s work involved the evaluation of economic studies, forecasting future energy trends, and the development of policies aimed at reducing greenhouse gas emissions through increasing energy efficiencies and reducing fuel consumption. He is a third-generation Arizonan who enjoys golfing and flying airplanes.
Energy Information Administration. (2007). Electric Power Industry Overview 2007. Washington, D.C.: Department of Energy.