- Energy Sources—Following the Money
- August 2, 2016 | Author: Seth V.D.H. Cooley
- Law Firm: Duane Morris LLP - Philadelphia Office
On April 14, 2016, the United States Senate Appropriations Committee unanimously approved an energy and water funding bill that would appropriate $2 billion for the Department of Energy’s Office of Energy Efficiency & Renewable Energy programs (an amount equal to fiscal year 2016 funding). According to the Appropriations Committee, this funding supports sustainable transportation programs that develop new fuels, lightweight materials and vehicle engines; energy-efficiency programs that develop standards and technologies to reduce energy bills; and renewable energy programs that work to lower the cost of solar, wind, geothermal and water power technologies.
On the same day, MidAmerican Energy Company, owned by Warren Buffett’s Berkshire Hathaway, announced its plan to invest $3.6 billion in the construction of new wind turbines that can generate up to 2,000 megawatts of power. Industry and Iowa state government sources report that this additional wind generation capacity in Iowa would increase the share of wind power, from among all sources of power generation in Iowa, from 31 percent to 40 percent. According to The Wall Street Journal (citing other sources), the average price of wind power in Iowa last year, under long-term contracts between producers and utilities, was about $29 per megawatt-hour, or 2.9 cents per kilowatt-hour. This price compares favorably to the $34.34 per megawatt-hour price for power from Midwest coal and natural-gas fired plants in the Midwest, also reported by the WSJ.
One day prior, Peabody Energy, the world’s largest private sector coal company, filed for protection under chapter 11 of the Bankruptcy Code. In its press release, Peabody spoke to the causes of this filing: "The factors affecting the global coal industry in recent years have been unprecedented. Industry pressures in recent years include a dramatic drop in the price of metallurgical coal, weakness in the Chinese economy, overproduction of domestic shale gas and ongoing regulatory challenges."
These are but a few examples of the significant shifting of capital and R&D investments from fossil fuel generation ventures to large-scale renewable ventures, and coming in bunches such as this, they suggest that the era of disparaging renewables as feasible, major components of domestic energy generation is over.