There has been a cluster of articles in recent days focused on how the global financial crisis is impacting the renewable energy industry. The Wall Street Journal, Washington Post, New York Times, and National Public Radio have reported on businesses struggling to secure financing or putting projects on hold due to tightened credit markets and falling oil prices.
All the focus on market gloom and doom makes us wonder if you’re a glass-half-empty or glass-half-full type of person? For the negative reports are offset with many positive stories about businesses moving forward with confidence now that federal tax credits for renewable energy have been extended.
So what about the negative foreboding? Several forces combined to form the economic maelstrom the articles explain. Oil prices have dropped considerably since July eliminating the closing cost parity gained between alternative energy sources, like wind and solar, and conventional sources, like coal. The global financial crisis has left banks skittish to lend money and commit to specifying long-term interest rates. These unknowns make it increasingly difficult for companies to secure lines of credit, and to complete a pro forma. Similarly, facility managers and executives cannot fully develop lifecycle cost and return-on-investment projections.
Yet there’s positive news out there as well. The solar power tax credits in particular bolstered industry forecasts; an 8-year extension is about as far-sighted a timeframe as Congress gets these days. The credit provides companies (and home owners) with enough time and assurance that it’s worth making a concerted effort to pursue renewable energy ventures. Even this week’s spate of articles covered positive stories amongst the less favorable ones. Every day Cooler Planet receives news feeds from energy-related sites that announce solar, wind, and biofuels projects coming online in the USA as well as around the globe.
Who becomes the next US President will also play into one’s optimistic or pessimistic outlook. Barak Obama repeatedly uses examples from the renewable energy sector to illustrate this vision of how the USA can create opportunities for new jobs and industry growth. Obama elevates the “energy issue” into one that can solve multiple challenges (including foreign oil dependence and energy independence, job creation, and economic growth).
John McCain also voices support for alternative energy and talks about climate change. He wants the US to support R&D to fund new technologies that bring efficient vehicles and alternative fuels to market (which by extension, is another way to lead to job growth). He emphasizes our ability to tap into other sources, such as offshore oil reserves, and to restart our nuclear power industry to overcome our energy challenges as well.
Interestingly, from a Speech Wars perspective, Senator Obama keeps the words “renewable energy” in play more often than McCain. According to www.speechwars.com, McCain has said “renewable” 15-times and “energy” 267-times; Obama has said “renewable” 112-times and “energy” 510-times. Do these words reflect each candidate’s intention and level of commitment?
The paradox of our global economic mess is the very financial avenues that have potential to propel us forward and out of the quagmire require capital to push us through. Alternative energy technologies will not solve our collective appetite for enormous amounts of power. Alternative energy can, however, shift global market dynamics so that oil and coal are not the only dominate player in town.