American Center Mumbai, via Flickrby Manish Bapna and Letha Tawney, via WRI Insights Google is backing it. So is Warren Buffett, America’s most-watched investor. GE, one of the world’s biggest manufacturers, is too. Each of these corporate icons is placing big bets and hundreds of millions of dollars on a future powered by wind and solar power. Apple just joined them, announcing plans to power its main U.S. data center in Maiden, North Carolina, entirely with renewable energy by the end of this year. So why – yet again – are pundits making dire warnings about prospects for renewable energy? The answer is that the clean tech industry is at a critical crossroads. On the one hand, wind and solar power are close to cost competitiveness with fossil fuels in many parts of the world— including the southwestern United States. In recent years, the cost of wind turbines and solar panels has plummeted, fuelling worldwide demand for renewables and leading to double-digit growth. The sector’s mid- to long-term future is very bright. For example, the latest industry analysis by McKinsey & Co. finds that solar PV deployment could increase 50-fold between 2005 and 2020, rivaling the growth rate for natural gas. On the other hand wind and solar power, still fledgling industries, face the imminent loss of the very government subsidies that have been driving their growth and cost reductions in both the U.S. and Europe. These policy shifts risk stalling progress toward cost competitiveness at the 11th hour. A recent report, “Beyond Boom and Bust: Putting Clean Tech on a Path to Subsidy Independence,” by authors at the World Resources Institute, the Breakthrough Institute, and the Brookings Institution, highlights the scale of the subsidy blow to the U.S. industry. (See Forbes’ coverage of the report, here.) The authors find that U.S. federal support for clean energy technology, dropped nearly 50 percent from 2011 to 2012 alone, and could plummet a whopping 75 percent from 2009 through 2014. If Congress fails to renew the wind power production tax credit (PTC), set to expire in December, this would undercut the U.S. turbine market, endangering tens of thousands of jobs. Despite these set-backs, some major corporate players are willing to ride out the turbulence, confident in clean tech’s long-term viability:
- MidAmerican Energy Holdings Company, a Berkshire Hathaway subsidiary, has committed $6 billion to become the largest generator of wind energy among regulated U.S. utilities.
- Google has invested more than $915 million in clean energy projects, including 20-year agreements to purchase power from wind energy developers in Iowa and Oklahoma, where it has large, energy-guzzling data centers. The tech giant has also launched Google Energy , a utility subsidiary that sells renewables-generated electricity to the grid.
- GE, already one of the world’s leading wind turbine manufacturers, announced in October 2011 that it would build a $300 million solar panel factory in Aurora, Colorado, which will make latest generation thin film panels from 2013.