Trends, Reports & Analyses

Decline Forecast for Renewable Power

By Steven Johnson | ECT Staff Writer Published: August 10th, 2012

Changing weather will cause a falloff in renewable energy in the United States this year, and tax policies might do the same in 2013, the Energy Department said.

A withering drought is cutting into corn harvests in the Midwest, meaning big losses in ethanol production. (Photo By: AP Photo/Seth Perlman)

A withering drought is cutting into corn harvests in the Midwest, meaning big losses in ethanol production. (Photo By: AP Photo/Seth Perlman)

Consumptions of renewables is projected to decline by 2.4 percent in 2012, mostly because of a loss of hydroelectric generation, according to the Short-Term Energy Outlook issued August 7 by the department’s Energy Information Administration.

That would be the first dip in renewable energy in the U.S. since 2007. About 8.6 percent of U.S. consumption came from renewables in 2011; that’s likely to stand at 8.5 percent this year.

While alternative energy production should bounce back in 2013—the agency foresees 2.1 percent annual growth—that could be imperiled by the loss of wind production tax credits set to expire at the end of this year.

Currently, EIA is forecasting a 17 percent jump in wind for 2013.

“The forecast for wind capacity additions and generation in 2013 will likely respond to whatever decision is made regarding the extension of production tax credits,” it said.

The losses in hydro generation were not unexpected. Record snowpack runoff in the Northwest has swelled hydroelectric dams in recent years. EIA is projecting them to return to traditional levels, which accounts for its projected 0.4 quadrillion Btu decrease from 2011 to 2012.

EIA noted that hydro is the most abundant renewable, so the 2012 decline will more than offset gains from other renewable sources.

However, the weather is also taking a toll on production of another source of alternative energy, as drought-stricken farmers in the Midwest have lost thousands of acres of corn to be used in ethanol.

EIA reduced its ethanol production forecast for the second half of 2012 from 900,000 barrels a day to 830,000 barrels a day. That’s an 8 percent drop.

The loss of ethanol, which is blended into gasoline, should not affect the price at the pump. “The impact of the forecasted decline in domestic ethanol production should be primarily reflected in reduced ethanol exports,” the agency said.

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