NCPA - National Center for Policy Analysis

Is Alternative Energy the Next Haven for High-Tech Whiz Kids?

February 10, 2003

The collapse of the technology sectors has left a number of young entrepreneurs searching for the next Big Thing. Could that be development of alternative forms of energy? Some apparently think so and they are concentrating their talents and resources on energy from such sources as biomass to solar to wind and geothermal.

Experts say the economic gap between such relatively expensive sources as these and costs of generating power from traditional fossil fuels is fast narrowing.

  • Electricity is the third largest industry in the U.S. -- worth about $300 billion annually.
  • Wind power is the most advanced renewable energy source and it can generate electricity at around 4 cents a kilowatt-hour -- putting it on a par with coal -- and technological advances could cut costs even further.
  • Biomass technology -- which takes organic materials, waste products or gasses trapped in the earth and turns them into fuel -- is already widely used and the economics are compelling.
  • Converting sunlight into electricity is still four times as expensive as coal or gas power -- though the price has come down to 20 to 30 cents a kilowatt-hour from $1 in 1980, and advocates claim technological advances will make it competitive with coal within a decade.

Deregulation would encourage the use of alternative energy sources, but it has been set back by the Enron scandal and other debacles.

About 30 states have policies which are supposed to encourage the use of renewable energy.

Source: Amy Cortese, "Can Energy Ventures Pick Up Where Tech Left Off?" New York Times, February 9, 2003.

 

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