base has the potential to smooth temporal variations of electricity generation associated with intermittent renewable resources and improve their integration into the electric system. A combination of intermittent sources backed by natural gas could make the combination of these sources dispatchable to the grid.
Continued deployment of renewable electricity-generation technologies requires concerted efforts to overcome market barriers and meet investment requirements. This includes navigating the “cash-flow valley of death,” where a new business has insufficient ability to raise the capital required for a new technology (Murphy and Edwards, 2003). For renewable-energy technologies, this stage typically occurs during the transition from public-sector to private-sector funding.
Further, renewable electricity must participate in highly competitive electricity markets. But renewable electricity has some economic attributes that differ from those of basic electricity. One such characteristic is that the electricity created at the renewable facility and certain attributes associated with its production can be sold separately. That is, one customer can buy the kilowatt-hours of electricity, while another can buy the “renewableness” associated with the generation through tradable instruments known as renewable-energy certificates or credits. The ability to separately track and sell the electricity and its attributes has increased the number of ways that renewable electricity sales can ultimately occur, thereby expanding the opportunities for renewable-energy development.
Further, renewable-electricity markets operate within a web of interlocking, overlapping, and sometimes conflicting policy prescriptions and legal and regulatory structures. The key risks engendered by this pervasive regime relate to whether future policies will conform to reasonable expectations. For example, Figure 6.8 shows the impact that an off-and-on policy can have on wind power investment: the intermittency of the PTC for wind power generation has led to large fluctuations in demand for wind turbines and in annual installations of new wind power capacity. These fluctuations affect the whole wind power enterprise, from employment to manufacturing to investment.
Increasing the deployment of renewable electricity-generation technologies will require consistent and long-term commitments from policy makers and the public to stimulate investment in business growth, enable market transformation, and