The Economics of Solar Energy: Is Fracking Killing Renewable Energy?
That big earthquake you just felt may be a bigger threat to solar energy than a cloudy day. Economics more than anything else drive the solar energy market and when oil and gas go up, the demand for renewable energy also go up. When the price for oil and gas go down, the demand for renewable energy also goes down. In an effort to produce low cost natural gas, the demand for renewable energy, including solar energy, the utilities are reducing the demand for solar panels on your homes.
As this new report from NPR suggests, the cost of natural gas has dropped considerably. The primary culprit is that earthquake you may have felt in Texas or Ohio. As the NPR reports suggests, "The reason natural gas prices have fallen is because production is way up, thanks to hydraulic fracturing. Fracking, as it's called, is a controversial drilling technology that some say harms the environment. But the process has also made it possible to extract oil and gas once thought to be trapped in rock too deep underground for drillers to reach."
Low utility rates sound good to consumers but in the quest to preserve low utility rates, the thirst for renewable energy is being squelched. As NPR reports, "This has allowed utilities that burn natural gas to produce electricity to hold the line on rates. For most of us, that's a good thing, but for those who've installed solar panels, it makes that investment less of a bargain."
This year promises to be another year of twists and turns for the solar energy industry. The major industry group just announced that it is merging with another solar energy group. As reported earlier this week in the San Francisco Chronicle, "The Solar Energy Industries Association (SEIA), the national trade association for the solar energy industry, announced today that it has officially merged with the Solar Alliance, an advocacy organization committed to establishing solar policies at the state level. Effective immediately, the Solar Alliance will operate under the SEIA brand in an effort to present a unified solar industry voice in all advocacy efforts at the state level."
Solar Novus Today reports that there will be more turmoil in the industry, but "stability is on the horizon, especially as the world's energy consumers realize that solar costs are in line with those of fossil fuels, that it is affordable and can be easily financed, and that it is an abundant and reliable source of energy."