More so than any other time in history, Americans are focusing their attention on energy issues. From the president's recent call to action on climate change to the possibility of finally attaining energy independence by the end of the decade, America appears to be entering a new golden age of energy development -- great news for our energy security and economy. But for some policymakers on Capitol Hill, there is a need for a much better understanding that renewable energy is a significant and rapidly growing catalyst driving the American energy transformation.
Across the country, the renewable energy industry is putting steel in the ground, increasing American energy security, competitiveness, and environmental quality. Simply put, renewables have earned their place in the sun -- quite literally in the case of solar, which accounted for 48 perent of all new electricity generation capacity across the U.S. in the first quarter of 2013.
Solar's contribution to America's energy mix this year highlights a trend of strong growth across the entire clean energy industry. Renewables were the largest source of new U.S. electricity capacity in 2012, providing over 49 percent of all new electrical generation capacity. Of that amount, wind energy made the largest contribution, outpacing even natural gas and adding over double the capacity of new coal last year. For all the hype surrounding America's oil and gas reserves, it is the renewables industry that is putting up the numbers in the creation of a more diverse and resilient energy portfolio.
Furthermore, the International Energy Agency just announced that renewable energy is expected to supply more electricity than nuclear reactors or natural gas by 2016. The EIA also estimates that wind, solar, bioenergy, hydro power, and geothermal may grow 40 percent in the next five years, double the 20 percent rate from 2011.
"Renewable power sources are increasingly standing on their own merits versus new fossil-fuel generation," proclaimed IEA Executive Director Maria van der Hoeven at June's Renewable Energy Finance Forum-Wall Street in New York.
This growth is not an accident. Renewable energy is already cost competitive in many parts of the country and as it continues to scale up, costs will continue to come down. Warren Buffett's MidAmerican Energy Company will be adding over 1,000 megawatts of new wind power to their Iowa energy portfolio by 2015. This new power will add no net cost to MidAmerican customers and is expected to stabilize long-term electricity rates while actually reducing near-term rates by more than $10 million per year by 2017.
It's important for our nation's policymakers to think more comprehensively when they discuss "energy independence" and the renaissance of a 'golden energy age' for America. That means recognizing renewable energy is essential to the American energy boom. From jobs being created to lower electricity rates to more secure energy portfolios, the combination of utility scale and distributed generation is being leveraged by smart investors across the country. And what's even more remarkable about renewables is their economic competitiveness despite an unfair policy playing field.
Federal policymakers can help change that with two key initiatives. First, with legislative action on the Master Limited Partnership Parity Act (MLPs) introduced by Sens. Chris Coons (D-Del.) and Jerry Moran (R-Kan.), Congress can act immediately to level the playing field for renewable energy project finance while simultaneously sending a confident signal to investors. If opened to renewable energy projects, the MLP tax structure with a market capitalization over $400 billion of private funding could drive even more private investment toward renewable energy in the very near future. MLPs continue to play an essential role in expanding the oil and gas sector -- it is long past time to do the same for renewable energy.
Secondly, the renewable energy industry should receive the benefit of long-term policy certainty that conventional energy sources have been given for decades. Fossil fuels reap the rewards of tax benefits dating back a century without any timeline for expiring. On the other hand, renewable energy tax credits like the Production Tax Credit (PTC) must be renewed by Congress almost every year, creating a highly inefficient boom and bust investment cycle and offering no certainty for companies seeking to enter/expand their role in the renewable energy markets. If Congress provides the assurance of stable, longer-term energy policy, private investment would significantly increase and the renewable energy industry would provide even greater benefits to the American people. Congress needs to extend both the PTC and the Investment Tax Credit to provide that certainty. Both policies are successful at encouraging private sector investment and industry growth.
It is time all of us take a hard look at every aspect of America's energy future and see things the way they really are. Renewable energy is an energy security and economic game-changer and needs to be treated as such. From private investment to gigawatt-scale power, clean energy is truly powering a new golden age of American energy development. It's time for our policymakers to act and help make renewable energy's unmatched potential a reality.
McGinn is president and CEO of the American Council On Renewable Energy.