Energy Policy:

Washington Gas Energy Services' Warren discusses impact of natural gas on renewables

How are low natural gas prices affecting investments in renewable energy? During today's OnPoint, Harry Warren, president of Washington Gas Energy Services, one of the largest natural gas and electricity suppliers in the mid-Atlantic, explains why businesses continue to have incentives to invest in renewables, despite low natural gas prices and a growing gas market. He also discusses recent shifts in the political rhetoric on energy policy.


Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Harry Warren, president of Washington Gas Energy Services. Harry, thanks for being here.

Harry Warren: Welcome.

Monica Trauzzi: Harry, as one of the largest natural gas and electricity suppliers in the mid-Atlantic, how much of a game changer is natural gas to the energy discussion and, in particular, to the future of renewables in the United States?

Harry Warren: Well, that's a really good question. Certainly, the abundance of natural gas that's coming into the market today really is changing the landscape of energy costs, especially on the electricity side in many parts of the country, here on the East Coast, because electricity pricing is very much influenced by natural gas. So, you're right, that is creating some challenges for renewable energy in the sense that renewable energy is trying to compete more successfully with conventional power on the grid. So lower grid power means more of a challenge. What is interesting to me though is that the development of renewable energy, especially wind power and more recently solar energy, has really been moving forward for some other reasons, not responding so much to its near-term competition with conventional sources.

Monica Trauzzi: Do we see a shift though among businesses away from investments in renewables and more towards natural gas or are business still taking sort of that long-term view and keeping their investments in renewables?

Harry Warren: You know, I think there's a number of different investors that we could talk about there. I think certainly there's a lot of big -- there's certainly more corporate investment, more investment in the energy industry going into natural gas, you know, some of the shale gas type formations. Of course, with oil prices being high, there's a lot of investment also shifting into liquid fuel, you know, exploration as well. But I do think that alongside that, those entities that have been investing in new infrastructure for wind power and solar, those things have -- those areas have continued to see very significant development as well. Down on the end-user side, where large corporations as part of their sustainability agendas are trying to purchase more renewable energy, support renewable energy development, I think those types of investments by end-users if you will, those seem to be increasing every day, despite the fact that there's this focus on cheaper conventional energy.

Monica Trauzzi: How do you think the political rhetoric on energy has shifted in the last four years and has there been a shift away from discussions on renewables?

Harry Warren: Good question. I think, you know, our business is really focused down at the level of talking to end-users. You know, we have clients that are local governments, that are corporations and even individual homeowners. And, again, what I find is interesting is that while political rhetoric may move in whatever directions it moves in, I think that end-users' interest in sustainability, you know, that's a word that's really evolved and taken on a lot of meaning over the past several years as corporations make it part of their overall corporate responsibility in general to have these sustainable agendas. And so I think that sustainability drive keeps the dialogue really high about purchases of renewable energy.

Monica Trauzzi: Big question on incentives. How should the government be incentivizing the development of energy, including renewables, in the United States?

Harry Warren: You know, I think I would say that the one thing that any industry depends on in terms of governmental policy, and it's certainly true in the renewable energy industry, is some consistency. And I think that's a challenge in the renewable energy industry at this time because there's a complex of incentives, some of which exist at the federal level, some of which exist at the state level and sometimes even at the local government level. And taken together, it's created an environment where solar energy, in many parts of the country, is moving very, very quickly. Wind power has done very, very well over the past many years. So I think the challenge is, is that if we can keep consistency in government policies at the federal level, that may be tax credits, at state levels it may be other types of incentives, that's the sort of landscape that keeps development moving forward.

Monica Trauzzi: So, you've spoken about this sort of steady growth that we've seen among renewables. So when we hear discussions about the PTC for example not being renewed, do you think that that won't have as big of an impact as some might say it could?

Harry Warren: You know, I'm not a real detailed expert in the wind issue, but I would say that it could have a significant impact. I think that's one of those issues that falls under the policy consistency envelope. You know, the PTC has been something that wind developers have been able to rely on consistently, so we've seen manufacturing set up in this country. We've seen a lot of development happening. I think the industry would certainly like to see consistency there and, again, together with some of the other policies that work in tandem with that that allows things to move in a stable way. So, certainly the industry would like to see that be continued.

Monica Trauzzi: Four years ago green jobs was a major selling point when it came to energy policy. Some people would say that that push didn't necessarily succeed as much as it had been sold. How do you continue selling the job creation benefits of renewables?

Harry Warren: I'll tell you, one of the things that I've observed is that state governments, which have had a very important role to play in solar industry development through the types of incentives and requirements that they've set, they're very much focused on jobs, you know, at the local level. And I think that they have remained very committed to their support of renewable energy because they do see that job creation. The solar industry, in particular the kinds of people that are installing systems on homes, on small businesses, at local universities and commercial establishments, they have a lot of good small business job growth stories to tell. And I think that's kept the state governments very engaged. So I would hope that that story is spilling over and being understood at the national level as it's clearly being understood at the state and local level.

Monica Trauzzi: All right, we'll end it right there. Thank you for coming on the show.

Harry Warren: OK, thank you Monica.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

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