Segment Focus
Alternative Energy
2014 Third Quarter
In 2013, energy from renewable sources represented just under 10% of U.S. energy consumption. While overall energy consumption has been relatively flat over the past ten years, renewable energy consumption has risen 56.2% since 2003. Biomass and hydroelectric currently represent the two largest sources of renewable energy, though wind and solar power are rapidly growing.1
Growth in renewable energy production and consumption has been driven by the following factors:
- Federal/state tax credits, grants, and other incentives
- State renewable portfolio standards (RPS), which mandate minimum thresholds for electricity generation from renewable sources
- Increased consumer sensitivity regarding environmental issues, specifically greenhouse gas emissions
- Declining costs
Going forward, the U.S. Energy Information Administration (“EIA”) expects the share of primary energy consumption from renewable sources to increase to 12% by 2040 under the “Reference Case.”2 The EIA cautions that projections regarding renewable energy “are sensitive to assumptions about government policies and external market factors. Key uncertainties affecting projected growth include expiration of policies that affect financial incentives for deployment or operation of particular technologies, the costs and performance of the technologies, the costs of competing generation sources, and macroeconomic conditions that affect growth ….”3 Under alternative scenarios, including renewable technology breakthroughs, continuation of tax credits or incentives currently set to expire, and/or carbon taxation, the share of energy sourced from renewable resources would be higher.
