Over the last several years there has been a noticeable push towards finding alternative energy solutions. Many scenic landscapes are becoming speckled with wind turbines, and geothermal heating systems are being considered during the design process of many buildings and homes. But, the alternative energy sector finds itself facing unique challenges despite the constant push for greener, more sustainable power.
The end to government incentives
Production tax incentives, which often helped consumers and businesses defer the cost of implementation of alternative energy sources, are set to expire in 2013 and executives from across the renewable energy industry are urging Congress to extend the benefits. Without the extension, industry insiders fear massive job cuts, delays on current projects and limited funding opportunities for new projects.
Robert Cleaves, president and chief executive of the Biomass Power Asssociation, told the Los Angeles Times that renewable energy projects are employing thousands of Americans and the only way to stabilize and grow the industry is to extend the tax credits beyond 2013. Without an extension, jobs are at risk.
According to Bloomberg BusinessWeek, the end of the government program will put 37,000 jobs in the solar sector at risk. And, leading wind turbine company Vesta Wind Systems A/S says it will cut 1,600 without an extension.
Furthermore, Mike Ryan, co-founder of PanTera Energy, alternative energy solutions provider specializing in geothermal systems, asserts that projects across the industry will be hurt by the looming deadline. “Industries like solar and wind will be difficult to wean off of the government incentives. ... Unless the technology can get to a point of affordability without the tax credits, many of the alternative energies will severely suffer.”
H.R. 3307, The American Renewable Energy Production Tax Credit Extension Act of 2011, proposed by U.S. Reps. Dave Reichert (R-Wash) and Earl Blumenauer (D-Ore.) would extend the tax incentives. It has received bipartisan support and is under review by the House Committee on Ways and Means.
Falling natural gas prices lessen demand
As domestic exploration continues to surge and supply grows, the cost of natural gas is at its second-lowest price point since 2002. According to Renewable Energy World, experts suspect prices will drop further in 2012 due to record-high supplies.
A Massachusetts Institute of Technology study reveals that increased supplies and low costs associated with the increase in natural gas reserves are suppressing the demand for renewable energy. Many consumers are sticking with natural gas instead of converting to alternative energy sources, in part because the cost for implementation of renewable energy sources is expensive on the consumer level.
The booming shale gas industry is being partially blamed for several alternative energy industries cutting planned projects. Many sectors of the industry simply can’t compete against the low cost of natural gas. And, with the end of the renewable energy tax incentives nearing, the pendulum continues to swing in the favor of natural gas.
Awareness is key
Alternative energy companies must continue to raise awareness of the finite nature of natural gas and other fossil fuels and the impact the industry will have on the Earth’s carbon footprint. Consumer, businesses and the government will need to be assured that the benefits of renewable energy will outweigh the cost factor.
Ryan believes the government will need to prolong the tax incentives in order to defray the upfront costs of implementing such technologies. “With incentives, the return on investment is much faster..."
Despite the challenges the renewable energy industry is facing, many people still believe it is the future for the energy market. With continued “green” pressure, the country is making strides to be more eco-friendly and alternative energy resources will remain a viable option.
Angela Stringfellow is a PR and MarComm Consultant and Social Media Strategist offering full-circle marketing solutions to businesses. Angela blogs via Contently.com.
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