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What Mattered in Energy Innovation This Year

Notable advances in renewable energy pale compared to the impact of shale gas.
December 29, 2012

Although renewable energy made impressive advances this year, its impact has been dwarfed by the changes caused by the surplus of cheap, abundant natural gas made possible by hydrofracturing—fracking—of shale deposits. It will also be hard for renewables to equal the impact of shale gas in the coming years.

Big rig: Workers drill for shale gas in Pennsylvania. The emergence of access to shale gas in the U.S.—and the low natural gas prices that followed—has created an extra hurdle for renewables.

As utilities shift electricity production from coal plants to natural gas ones, carbon dioxide emissions have dropped to levels not seen for 20 years. In China, the government has set ambitious goals to scale up fracking and shale gas production there as well.

Similar drilling technology has led to a surge of oil production in the United States that could have it rivaling the production of oil in Saudi Arabia. It’s led to credible estimates that within a couple of decades—with the help of rigorous fuel economy standards—North America could produce as much energy as it consumes.

Shale gas is having a major impact on renewable sources of energy as well. For example, as a result of cheap natural gas, some companies that had been founded to produce biofuels from renewable sources—and entrepreneurs who had dedicated much of their lives to developing such technologies—have given up and turned instead to making fuels with natural gas. At the same time, cheap natural gas has made it far more difficult for renewable sources of energy to compete.

Meanwhile, the prospects for solar, wind, biofuels, and advanced vehicles took a decidedly bearish turn this year.  

Solar companies went bankrupt left and right. Electric vehicles sales were less than expected and A123, a once-promising advanced battery company, declared bankruptcy and was auctioned off at a fraction of the amount that had been invested in it.

Yet incremental progress is being made. Hybrid vehicle technology is now often profitable. There have also been some developments in improving internal combustion engines. Efficient internal combustion engines could be cheaper than batteries and electric motors, and so work their way into mainstream sales faster than electric vehicles, having a bigger impact on fossil fuel consumption over the next decade.

And even while many solar panel companies are going out of business, startups continue to push forward with new solar technology. Silevo combines several improvements to conventional silicon solar cells that both increase efficiency and lower manufacturing costs. Its technology works largely with existing manufacturing equipment and can take advantage of supply chains for conventional solar panels.

Yet for alternative technologies to take on fossil fuels at a large scale—and help achieve the dramatic cuts that would likely be needed to stabilize greenhouse gas levels—technology has to get far better than it is now. Incremental improvements are unlikely to be enough. The intermittency of renewable energy is something Germany will have to confront sooner than others as it embarks on an ambitious plan to cut carbon dioxide emissions while abandoning its greatest source of low-carbon energy: nuclear.

The U.S. Department of Energy has an ambitious goal to bring the cost of solar power down to six cents per kilowatt hour, less than half of what it is now. But to compete with natural gas at a large scale—in the United States now, and perhaps in other places as shale gas is developed around the world—it may need to achieve lower costs still. And that cost will have to build in the cost of intermittency—something the current DOE target doesn’t include.

Can such low costs be achieved? This year brought some encouraging signs. One company, Alta Devices, having built record-setting solar cells that could lead to far lower prices, is making progress in scaling up its technology and finding markets for it. Companies like Silevo could eventually make its solar cells cheaper by adopting some of an array of technologies that are being developed by other companies.

But no one knows the extent to which these advances can be commercialized, or what the real costs will be. A world powered mostly by renewables remains hard to imagine.

Yet just a few years ago, the shale gas revolution was equally hard to imagine. The challenges ahead aren’t reason to give up on alternatives to fossil fuel—but instead are a reason to keep driving innovation forward.

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