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Supply Chain Adaptation Needed In Renewable Energy: Consultants

Peter Gardett

AOL Energy

16 March 2012


Barbara Sands, renewable energy expert at PA Consulting Group, points out that with the federal grant incentives program for renewable energy expiring, players across the supply chain will need to adapt to remain competitive.

Equipment manufacturers, renewable developers and utilities will each need to face this issue, and Barbara highlights ways in which each is likely to adapt to remain competitive. 

1. Equipment manufacturers will come under pressure to improve performance.

According to Barbara in the article, "Assuming the current projected level of natural gas prices of about $4.50/MMBtu, the capital cost of wind projects would need to be at least 35% lower for wind generation to be competitive with new natural gas fired generation.

2. Renewable developers will need to focus on sites and projects that provide the best economics.

"Natural gas prices would need to almost triple from the current levels of less than $3.00/MMBtu for renewables to begin to be competitive on a total cost per MWh basis," she points out in the article.

3. Utilities will need to find a way to recover the high cost of renewables.

Barbara notes that if utilities’ renewable energy purchases end up costing more than double the available price of energy, many will fear prudence challenges in the coming years. And she says that as a result, this places pressure on regulators to allow them to recover the higher cost of renewables in future rates, thereby passing these costs to customers.

To read the article online, please click here.

For more information on PA’s expertise in Renewable Energy, please click here or contact us now.

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