Voters put $10 limit on green energy cost

Written by The Financial Times | Updated: Jun 17 2011, 08:50am hrs
By Ed Crooks in New York

US voters support increased use of renewable power but would pay only about $10 per month extra for it, according to an opinion poll that highlights the difficulties facing many forms of lower-carbon energy.

The poll also identifies reduced US dependence on foreign oil as a top priority for energy policy and shows support for greater use of natural gas, in spite of concerns about possible pollution caused by shale gas production.

The results suggest that higher-cost forms of alternative energy - such as offshore wind, some types of solar power, new nuclear reactors and emissions-free clean coal plants - are likely to come under growing political pressure.

George Bilicic, global head of power at Lazard, the investment bank that funded the poll, said: The alternative energy industry is going to experience robust growth, but there will be an increasingly clear differentiation between the efficient low-cost solutions and the rest.

In solar power, for example, it is hard to see how the high-cost folks are going to survive.

The expanded use of solar power is backed by 88 per cent of the polls sample of 1,000 likely voters, natural gas by 84 per cent, and wind by 81 per cent.

However, asked to rank themselves on a 1-10 scale for willingness to pay more for those forms of energy, only 21 per cent reported a score of eight or more. The average extra they were prepared to pay was $9.74 per month; about 10 per cent of the average US electricity bill.

Alternative energy is supported in the US by a plethora of state and federal initiatives, including tax credits, loan guarantees for project finance, and portfolio standards that mandate a proportion of electricity that must come from renewable sources.

However, those incentives have been coming under pressure because of their effect on government finances and energy bills. Chris Christie, Republican governor of New Jersey, recently proposed cutting the states target for renewable energy by 2021 from 30 per cent to 22.5 per cent of electricity generation. The move was welcomed by the states chamber of commerce as helping avoid an excessive rise in business energy costs.

In Wisconsin, where tough restrictions have been imposed on the development of wind farms, the campaign against them has been based in part on the argument that they drive up the cost of electricity.

Some forms of renewable power, including wind energy in the Midwest and solar power in the south-west, are now at or near the cost of comparable gas or coal-fired generation, according to the industry.

However, Jim Nelson, chief executive of Solar3D, a California-based solar power company, said the industry needed to drive costs down further to compete on a level playing field with fossil fuels.

Government subsidies are a drag on the solar industry, he said. The only thing that is going to make a large-scale solar industry viable is good economics.

The Financial Times Limited 2011