PRICE WAR – NAT GAS V. NEW ENERGY

Analysis: Gas is killing green energy in price war
Gerard Wynn (w/Nina Chestney, Vera Eckert, Barbara Lewis, Karolin Schaps, Muriel Boselli, Christoph Steitz, Nichola Groom, Alister Doyle, Eileen O'Grady and Leonora Walet), June 16, 2011 (Reuters)

"A widening shale gas revolution is killing the economics of renewable energy, even as falling costs allow wind and solar to overtake fossil fuels in niche areas, say energy executives and analysts.

"Solar panel prices are down about 10 percent this year, but chasing a moving target as discovery of cheap shale gas spreads beyond the United States…Even big renewables investors, such as French energy company Total, see solar as a tiny part of the picture decades out, compared with gas. Total paid $1.4 billion for a majority stake in U.S.-based SunPower Corp…"

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"The trouble is that a new "golden age of gas," as the International Energy Agency dubbed it, has created massive over-capacity in a key rival fuel for power generation…Building new gas plants was half the price of new nuclear, and much cheaper than wind and solar, said John Rowe, chairman of U.S. power company Exelon Corp. Shale gas has especially suppressed prices in the United States…Energy ripples from a Japan quake, where some countries are now rolling back nuclear plans after the Fukushima crisis, would favor coal and gas as much as renewables, said International Energy Agency chief economist Fatih Birol…

"Offshore wind may be in the same cost range as gas by 2015, said Joergen Kildahl, a board member at Germany's E.ON group, one of the world's biggest utilities…But that did not include the cost of building back-up for the intermittent power source…"

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"After steep price falls solar power is now close to being economic without subsidies -- called grid parity -- but only…sunny places with high power prices and fewer alternatives…Falls in solar panel prices may flatten by 2013-2014…[and studies suggest there will be] widespread grid parity with retail power prices by 2015…Industry module prices had fallen by about 10 percent in the first half this year and would fall a further 4-5 percent in the summer…[And analysts] and renewable energy supporters often point to hidden costs in the case of fossil fuels and nuclear.

"Fossil fuels, for example, produce carbon emissions whose damaging impact on the world's climate is not priced outside Europe. Rare accidents and waste disposal may not be fully costed in the case of nuclear power. Question marks have been raised over the impact of shale gas on water quality…"