The real renewable energy opportunity: Transmission?
Silverstein's message is that utilities are increasingly backing renewable energy, driven in no small part by Renewable Portfolio Standards (RPS) which are now in effect in 19 states. While the aggregate non-hydro renewable energy supply remains less than 2% of the US's 770,000MW overall generation capacity, he reports that some experts think that share might triple within four years.
One thing to note, however, is that what this really comes down to is wind and geothermal power. While solar power is coming along, waste-to-energy continues to make some noise, and some still hold out hope for microgen fuel cells to play a part, wind and geothermal are already the renewable energy of choice for most utility or renewable energy certificate (REC) programs. And when you consider that there are few venture-backable deals to be found in wind and geothermal now, as those industries have matured, then it isn't clear how a venture-stage investor can take part in the emergence of renewable energy by utilities.
Something else that Ken reports, however, is also notable: Transmission is the key constraint for many of these projects. Wind and geothermal power resources are often found inconveniently far away from existing transmission lines. For that power to be useful, there's got to be a connection made to get that power to where it will be used.
This can be a significant obstacle -- at the recent PowerGen Renewable Energy Conference in Las Vegas, one presenter I saw showed that it made more sense to place a new renewable energy project in a certain location in New Mexico that wasn't as good in terms of the efficiency of the local resources, but was more conveniently sited to the best transmission resources.
Ken points out that the transmission grid in the Midwest is already overloaded, making it difficult to harvest that region's significant wind power potential. Also, he notes that in Texas it has been estimated that new transmission costs up to $1m per mile, and that bringing 10,000MW of renewable power to market would require an additional investment of $2B.
Thus, the market opportunity for new technologies that enable lower-cost, reliable, higher-throughput power transmission could be huge, and near-term...