Can Industry Rely on Renewable Sources for its Energy Needs?

Posted: Aug, 13 - 2010

Published: Aug, 17 - 2010

Format: application/pdf

No Of Pages: 5 pages

Language: English

Abstract

The US is gradually realizing that fossil fuel is no longer a viable energy option, not just due to its impact on the environment, but the economy as well. According to the Environmental Law Institute, subsidies for fossil fuel, from 2002 to 2008, totaled a whooping $72 billion. With the US economy deeply dependent on fossil fuel, moving towards cleaner, cost effective and sustainable renewable energy sources can be challenging.

Most of the states in the US have set themselves ambitious Renewable Portfolio Standards (RPS) for the next 10 – 15 years and headlines like “Colorado Shoots for 30% Renewable Energy by 2020” are heartening. But what does this mean for the industry?

Industry needs reliable and affordable energy to stay productive and competitive. At the same time, it needs to balance between its growing demand for energy and the urgent need to protect the environment.

Industry accounts for more than a third of total energy consumption in the US, and 70% -80% of this sector’s energy demand is for heat production. Given the current concerns of global warming, environmental pollution, energy security and industrial competitiveness, there is increasing pressure on industry to use modern, clean and efficient sources of energy. Till 2007, just 8.5% of the total energy demand in the US was fulfilled from renewable energy sources. However solar, wind and biomass-based technologies have shown considerable potential and are waiting to be tapped not just for domestic use but industrial energy purposes as well.

This whitepaper considers the feasibility of three different types of alternate energy sources, namely, solar, wind and geothermal. It then looks at infrastructure requirements that will make large scale use of renewable energy possible, namely, energy storage systems, smart grid, smart meters and energy efficient transformers. The whitepaper also looks at Pacific Crest Transformer’s offerings for the renewable energy sector. Besides acknowledging a range of energy efficient transformer products from Pacific Crest Transformers, the whitepaper particularly dwells on offering for the wind energy sector.

Introduction

Energy is the largest industry in the world. It fuels both the manufacturing and service sector and is estimated to be about $ 7 trillion TWh in size. The US produced and consumed 4274 TWh of energy in 2006 alone. Industry consumed 32.3 trillion Btus of the total US energy use, while the generation of electricity used 40 trillion Btu. Not surprisingly, almost 75% of energy consumed in the US comes from fossil fuel.

The fallout of excessive dependence on fossil fuel for energy is having an impact on the environment and people alike. With growing acknowledgement of the negative effects of the use of fossil fuel, research and development in the renewable energy sector is getting some serious attention.

According to market studies, investment in renewable energy is growing at 45% a year – essentially doubling every two years. It is expected that energy generated from alternate sources will become cost competitive compared to energy generated from fossil fuel, especially with the costs of pollution from fossil fuels factored in. This is increasingly becoming the case with the tax on CO2 production. The cost of alternate energy has been declining, for example the cost of energy from solar photo voltaic cells was about $2 per KWh in 1980 but has come down to about 25 US cents per KWh today. In case of wind energy, costs have dropped from 35 cents per KWh in 1980 to about 8 cents per KWh in 2009.

Despite the thrust towards alternative energy, U.S used renewable energy sources such as water, geothermal, wind, sun, and biomass to meet just 8.5% of its total energy needs in 2007.

The Energy Information Administration (EIA) however projects that electricity generated from renewable sources will account for as much as 15.8% of total electricity generation in the U.S. by 2030. This growth from 8.5% in 2007 to 15.8% in 2030 is to be propelled by extension of Federal tax credits and new loan guarantee programs in the American Recovery and Reinvestment Act (ARRA) of 2009.