According to a recent study by Frost & Sullivan, a major international industry research firm, renewable energy is gaining ground in North America as global in-ground fossil fuel reserves continue to dwindle and oil prices fluctuate.

In July 2008, oil peaked at $147 per barrel and then fell by more than 70 percent to less than $40. At press time, it was near $70 and threatening to keep rising. As the global recession subsides and demand returns, oil prices are likely to rise, and investor interest in North American renewable energy generation may become even more vigorous, especially in view of U.S. and Canadian government-incentive programs.

“Even though oil will have an impact on the market and will affect our forecast, there are other critical factors. If you look at the United States from 2001 to 2007, you will see that the federal production tax credit (PTC) was one of the main variables that affected the wind energy market,” said Georgina Benedetti, Frost & Sullivan’s research analyst.

Benedetti is referring to the precipitous drop in renewable energy investment when the PTC lapsed for some period of time before being subsequently extended for commercial wind turbines. There also was uncertainty about the extension of the federal investment tax credit (ITC), which affected mainly residential and commercial solar investment. These uncertainties were resolved with passage of The American Recovery and Reinvestment Act of 2009. The bill significantly expanded the program and extended the PTC through 2012 and the ITC through 2016. Other incentives included in the act allow taxpayers eligible for the federal renewable electricity PTC to take the federal business energy ITC or receive a grant from the U.S. Treasury instead of taking the PTC for new installations.

The National Renewable Energy Laboratory estimates that an extension of the PTC through 2020 could stimulate enough wind power to create 17 percent of the nation’s electricity by 2030.

The following are highlights from Frost and Sullivan’s analysis:

• The solar energy market is expected to grow at a compound annual growth rate (CAGR) of 39.9 percent from 2009 to 2015.

• Wind energy installed capacity projects are expected to increase at a CAGR of 31.6 percent during the forecast period.

• The PTC has leveled the economic playing field for wind projects.

• In several parts of the United States, the PTC has lowered the electricity price generated by wind power plants to less than 5 cents per kilowatt-hour, making wind energy competitive with new coal or gas-fired power plants.

• The removal of the $2,000 cap and an eight-year extension of the 30 percent federal solar tax credit for homeowners promotes solar power projects and is expected to reduce the costs of photovoltaic modules.

• The major challenge to the expanded adoption of clean energies are high capital costs.

“Technological improvements, such as higher energy efficiency, greater reliability of renewable-energy technologies, low-cost materials, and improved methods to store energy, can be addressed by stimulating technological research in private and government laboratories,” Benedetti said. “In fact, R&D in renewable energy has been receiving increasing attention from various governments.”