The Wind Energy Industry and Deutsche Bank’s Three Pillars of a Successful Market

When a speaker at yesterday’s CleanTechLA event presented what Deutsche Bank calls its “three pillars of a successful market,” I could see some of the main challenges associated with the migration to renewable energy.  Abbreviated “TLC” (something that everyone and everything needs to receive), they are Transparency, Longevity, and Certainty.

With the clean energy industry, we have a combination of events that serve to destroy, or at least, greatly reduce these three items.  Perhaps the production tax credit (PTC) associated with the wind energy business is the most glaring example.

The PTC, which provides a 2.2-cent per kilowatt-hour benefit for the first ten years of a renewable energy facility’s operation, was due to expire at the end of 2012.  Though 2.2 cents may not sound like a lot, it was enough that its threatened expiration brought the entire industry to a stop.  Numerous projects were cancelled, and thousands of workers were laid off.  At the eleventh hour, a few Congressmen met behind closed doors and fashioned a last-minute deal to keep the incentive in place through the end of this year.

Exactly what happened back then?  And what will happen at the end of 2013 is anyone’s guess.  The problem?  Investors don’t like to guess.

One thing’s certain, though: renewable energy’s opponents, i.e., the fossil fuel boys, have done a magnificent job to ensure that wind, by far the largest renewable threat to gain major market-share of our energy mix, will continue to limp along without the Transparency, Longevity, and Certainty needed for strength and stability.