Oil may fuel ‘green’ prospects

With oil futures soaring above $55 a barrel and natural gas doubling in price in the past two years, renewable energy is looking a lot better to many – not just on environmental merits but on price.

Terence Chea
Associated Press

http://www.azcentral.com/arizonarepublic/business/articles/1031greenenergy31.html

Wind, solar, geothermal and other green-power sources long have been championed by people worried about smog and global warming, but until recently these sources were too costly to compete. Now, the surging cost of fossil fuels is changing the energy market.

"Rising fossil-fuel prices are making renewable energy more competitive in the power market," said Steve Taub, an alternative-energy analyst at Cambridge Energy Research Associates.

Renewable energy can’t offer much relief to drivers and companies seeing their profits evaporate because of skyrocketing oil prices, because viable green alternatives to gasoline are hard to find.

Biofuels such as ethanol and biodiesel aren’t widely available, and hydrogen-powered cars aren’t expected to hit the market for years.

In the electricity market, though, green power, especially wind, is competing with traditional sources.

At today’s average wholesale prices, wind costs 4.2 cents per kilowatt-hour, compared with 4 cents for coal, 6.8 cents for natural gas, 9.1 cents for oil and 10 cents for nuclear power, according to Kyle Datta, managing director at Rocky Mountain Institute, a research group focused on eco-friendly business.

Experts estimate that at today’s consumption rates, known global supplies of oil and natural gas will be depleted within decades. However, prices are expected to rise significantly long before supplies run out, making those fuels too expensive to use at current levels.

In the short term, fossil-fuel prices are being driven up by war, political instability, natural disasters and other variables.

The long-term outlook is clearer: Global supplies are dwindling as demand soars, particularly in China and India, where automobiles are multiplying and economies are growing at breakneck speed.

Several major companies, particularly BP PLC, are investing to develop alternative fuels such as hydrogen, wind and solar. BP Solar, a BP subsidiary, has grown 30 percent annually, boosted by government incentives that make solar competitive in sunny states such as California, spokeswoman Sarah Howell said.

Less than 3 percent of U.S. electricity comes from renewables such as wind, solar and geothermal, but that share is expected to increase as fossil-fuel prices rise.

For now, advocates are pleased that pocketbook concerns are generating renewed interest in green power.

"It brings attention to the need to diversify America’s energy portfolio," said George Douglas, spokesman for the National Renewable Energy Laboratory in Golden, Colo. "It raises people’s awareness of the cost of energy and where energy comes from."