Renewable Energy Build Out: Progress to Date and the Path Ahead

1. Renewable Energy Build Out: Progress to Date and the Path Ahead Steven G. Chalk Deputy Assistant Secretary for Renewable Energy U.S. Department of Energy August 4, 2008

2. Status of Renewable Electricity in the U.S. U.S. Renewable Electricity Capacity by Source (2000-2007) MW Sources: EIA, AWEA, IEA PVPS, Navigant, SEIA, GEA Although renewable energy (excluding hydropower) is still a relatively small portion of both U.S. and global electricity supplies, U.S. renewable energy installations have nearly doubled since 2000

3. In Context: Global Renewable Energy Development 843 GW 9.5 GW 74 GW 5.1 GW 0.4 GW 45 GW

4. U.S. and European Renewable Electricity Installed Capacity* Renewable Electricity Installed Capacity (2002-2007) –United States and the European Union • What Europe has done to promote GW-scale clean energy: • EU renewable energy targets have been in place since 1997 • In March 2007, EU leaders reached a binding agreement that 20% of the 27 member countries’ energy should be produced from renewable sources by 2020 • Individual countries have large incentives for RE development, including renewable portfolio standards, feed-in tariffs, capital subsidies, and other fiscal incentives • Instituted stable, long-term policies • Germany’s Renewable Energy Sources Act (EEG) first regulated feed-in tariffs in 1991, and underwent major updates in 2000 and 2004. EEG stipulates purchase amounts of renewable energy for local power companies (with feed-in tariffs provided for a set duration at a declining rate). 2006 EU: 9.1% of total installed capacity US: 2.5% of total installed capacity Gigawatts *Excludes Hydropower Although total electric capacity is lower in the European Union than the United States, the EU has more renewable electricity capacity installed .

5. Past Investments Have Dramatically Reduced Renewable Energy Costs

6. Renewable energy can come online at a rate and scalethat matters Renewable energy has been contributing to a growing portion of U.S. electric capacity additions (40% in 2007; up from 1% in 2002)

7. Annual and Cumulative Wind Installations by 2030 20% Wind in the U.S. is Possible (300 GW by 2030) • RATE OF SCALE-UP: Installation rates need to increase to ~16 GW/yr by 2018 until 2030 • INVESTMENTS: Over $1 trillion in economic investment • BENEFITS: • half million jobs for manufacturing, installation and operations; • new property tax revenues; • natural gas demand reduced by ~7 billion ft3/day; • 25% of expected electric sector CO2 emissions avoided in 2030; • 8% reduction in electricity sector water consumption • 20% WIND REQUIRES: significant changes in transmission systems to deliver wind energy; improved turbine technology to generate wind power; and large expanded markets to purchase and use it Achieving 20% Wind will require energy infrastructure improvements, stable state and federal policies, and technology improvements

8. The U.S. Has Consistently Exceeded Expectations for Wind Installations Wind Installed Capacity Actual and Projections 1995-2025 Megawatts Note: all AEO numbers reflect net summer capacity projections

9. EGS Exploration and Development Future GW-Scale Renewable Energy Technologies: Enhanced Geothermal Systems (EGS) • Enhanced Geothermal Systems (EGS): engineered reservoirs that have been stimulated to extract economical amounts of heat from unproductive geothermal resources. • DOE-sponsored, MIT-led study “The Future of Geothermal Energy” • Found: potential to tap up to 100 GW of energy in the first 10 km of rock underneath the U.S. by 2050 (one-tenth of current U.S. generating capacity) • Congress funded DOE Geothermal Program in Fiscal Year 2008 with $20 million – this is being used primarily to explore R&D and demonstration projects of EGS systems

10. U.S. EGS Resource Map (10 km depth) Opportunity to limit the risk of substantial upfront drilling costs of geothermal energy (hydrothermal and EGS) The Problem: High risk, significant early-stage drilling costs necessary to quantify geothermal potential of a site inhibit the deployment of geothermal energy. • Potential Solution: • Cost-Shared Exploratory Drilling Program • Developer must have an adequate resource site and ability to successfully develop and finance the project in order to be eligible for funding. • Government provides ~30% cost for drilling exploratory wells; developer provides other ~70%. Government cost-share may vary depending on risk. • Developer repays government (with interest) upon drilling a successful well. • Information obtained from drilling both successful & unsuccessful wells is provided to the government. • Government compiles a database of drilling information.

11. Wave: Pelamis—Ocean Power Delivery Tidal: Verdant—Power RITE Turbine New Effort: Water Power Technologies • It is estimated the resource potential of ocean energy is on par with conventional hydropower (which currently makes up 7% of U.S. electricity generation) • Fiscal Year 2008 – Congress appropriated $10 million for Water Power R&D

12. Roadblocks to Renewable Energy Growth Access to: 1. Market2. Capital3. Product Market Capital Product

13. Capital Roadblocks to Renewable Energy Growth Access to: 1. Market 2. Capital3. Product Market Product

14. Total miles of new transmission: 12,650 Transmission is the Number One Barrier to Expanded Renewable Energy Development in the U.S.

15. Despite rapid domestic growth in solar and wind installations, the majority of manufacturing is outside the U.S. U.S. and Global Solar Manufacturing Capacity • As domestic solar markets grow, new downstream capacity will come on-line • But key segments of the market (wafers/cells) may be attracted by ~40% savings abroad • Increases U.S. jobs and tax base; improves trade balance • Possibility for superior U.S. manufacturing capacity and knowledge base • U.S. manufacturers have an incentive to bring plants on-line as soon as possible The U.S. is steadily falling behind the rest of the world in solar manufacturing capacity Because RE fuel is free, the best way to reduce renewable energy costs is to reduce the costs of manufacturing the ‘widgets;’ manufacturing also creates jobs and RE expertise within the U.S.

16. We Need Stable, Technology-Neutral Policies that Promote Energy and Environmental Security Policy Capital Technology Long-term, stable policies bridge capital and technology to create a robust renewable energy market