The clean energy bill now moving through Congress is coming into to clearer focus, with House Democrats settling on a 15% nation-wide renewable energy requirement by 2020. The bill also includes an additional 5% efficiency target adding up to 20% non-conventional energy goal in the next eleven years.
While this is somewhat less than some observers were hoping for, investors in the renewable energy sector should still be heartened by this important news. Similar requirements in California have lead to a gold rush of investment in the green energy sector.
Just yesterday, BrightSource Energy, a private venture based in Oakland closed the largest solar deal in history, committed to building seven solar thermal installations in the southern desert to supply Pacific Gas and Electric Co with 1,300 MW of power - enough for 530,000 homes. Analysts estimate this partnership could be worth more that $3 billion. Brightsource cut a similar deal with Southern California Edison earlier this year for an additional 1,200 MW of green generating capacity.
California utilities are scrambling to find enough renewable power to meet a state requirement to provide 20% green energy by 2011. The national bill being finalized by Congress will be a similar shot in the arm for solar, wind and geothermal companies elsewhere in America, forcing utilities to partner with emerging players to bring green supply on-line quickly.
The hard deadline in the Golden State aided green start-ups in other important ways. Brightsource bucked the gloomy trend in the credit market, managing to raise more than $160 million in the worst capital environment in decades, including a $115 million Series C round last May.
The draft legislation now in Congress remains far from a done deal and conventional energy interests are pushing back hard. However, House Democrats have a heavy hammer in their back pocket: the Clean Air Act.
Should the House fail to pass the clean energy bill, power producers would instead face costly regulation of CO2 as a pollutant – a potentially complicated plan B that no one seems to favour, including such heavy hitters as US Chamber of Commerce.
"As Congress once again prepares to bang the gavel on a climate change policy debate, congressional leadership has a serious choice to make: continue to push the same costly, rigid ideas of the past two decades, or take steps to begin a workable process to reduce emissions of greenhouse gases," warned chamber vice president R. Bruce Josten.
The political planets are finally lining up for the long-awaited passage of national regulation with teeth that may be a huge boost to the renewable energy sector.
This formidable stick is being coupled with some generous carrots courtesy of the US Treasury. Obama has committed a staggering $129 billion in grants, incentives and tax breaks for the green energy sector.
This is the kind of one-two policy punch pioneered in California that has delivered impressive results in the marketplace, such as the recent deals closed in the solar sector. Expect similar success stories across the nation as utility companies are forced to think outside the conventional fuel box.
Picking winners in this emerging field will of course be challenging. At Energy Boom, we will do our best to keep you informed on the latest green energy news from around the world so you can make informed investment decisions in a shifting market.
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