Low oil prices won't hurt renewable energy, says US EIA

Tax incentives more important than oil price and oil is not in head-on competition with renewables for electricity production, says government’s chief energy analyst
Suzanne Goldenberg The Guardian 28 Jan 15;

Cheap oil is not about to kill off wind and solar power as some experts have claimed, the US government’s chief energy analyst said on Wednesday.

The historic drop in crude oil prices, with Brent crude trading at $49.04 a barrel in London on Wednesday, had raised fears that renewable energy sources would struggle to compete.

But Adam Sieminski, who heads the Energy Information Administration, said oil was not in head-on competition with renewables when it came to electricity generation – and that government policies would help shield the clean energy industries.

“A lot of the demand that is coming for wind and solar additions in the US is supported through tax incentives and state energy programmes that require a certain percentage of electricity to come from renewables,” Sieminski told a breakfast hosted by the Christian Science Monitor.

However, the EIA does expect US greenhouse gas emissions to creep up in 2014 – undermining Barack Obama’s efforts to fight climate change – with cheap oil encouraging economic growth.

Installations of industrial-scale solar power doubled in 2014 – because of those support programmes and falling prices for solar panels. However, renewables overall, excluding hydro, still account for only about 6% of US power generation.

Most of America’s electricity comes from coal and natural gas – not oil – so the cheap global oil prices would not have an immediate effect, Sieiminski said.

“I think that in the near-term the drop in oil prices is not really going to have much of an impact on wind and solar installations,” he said.

But it could be a different story for hybrid and plug-in vehicles. There are signs that $2 a gallon gas is making big cars and trucks more popular for US consumers again, and the head of the world’s top renewable energy agency recently warned low oil prices threatened electric cars. But even on cars, Sieminski said other factors came into play.

Car ownership is declining over recent decades because of urbanisation, and as a lifestyle choice among younger Americans. In addition, many cities offer perks to electric car drivers, such as the right to share the carpooling lane, or free charging stations.

“Is the growth in all electric vehicles really being driven by gasoline prices, or is it social?” he said.