As oil rises, cleaner energy surges

With the price of oil hovering above $55 per barrel, demand is rising for a wide array of alternative energies - from wind turbines to cars fueled by corn oil.

While such devices and fuels always capture attention during spikes in oil prices, the alternative-energy movement is moving well beyond the novelty phase. It is becoming more ingrained in the nation's power grid and in middle-class homes as technologies improve. Consumer demand has Toyota predicting the sale of 100,000 of its Prius hybrid cars in the United States next year.

Even solar panels and windmills, often associated with the Jimmy Carter cardigan sweater days, are showing up in more suburban neighborhoods and other unexpected places. For example:

• A Louisiana entrepreneur wants to put windmills atop old oil and gas rigs in the Gulf of Mexico and send the power ashore.

• For the first time nationally, Home Depot will be selling solar devices alongside its plumb bobs and Behr paint.

• Gasoline marketers in Denver, Seattle, and other cities are blending ethanol into their gasoline - not for environmental reasons, but because it's now cheaper than some oil-based additives.

Although alternative fuels still make up a small fraction of US energy supplies, they are growing at a 30 percent rate compared with 4 percent for oil and 6 percent for natural gas. The projects are especially popular among states with governors opening up new wind farms and farm-belt ethanol refineries. But it's not just a political fad. The cost of many of the alternative fuels is approaching that of oil and natural gas. That competitiveness, combined with congressional renewal of a key tax credit, has business signing contracts to build everything from new wind farms in Iowa to solar farms on top of FedEx terminals.

"This is a period of high fossil-fuel costs and low-interest rates, which gives renewable energy an advantage unlike it's had over the last 20 to 25 years," says George Sterzinger, executive director of the Renewable Energy Policy Project in Washington. "With aggressive development and a reduction in the amount of LNG either through taxes or portfolio standards, by 2020 renewable power could easily be 15 percent of the electric energy produced."

Energy experts say, however, the US will still lag behind Europe, which has plans to produce 10 percent of its power from alternative sources by 2010 and 20 percent by 2020. Denmark, which sits on the windy North Sea, probably leads the world with 20 percent of its electricity currently coming from wind farms. By next year, that will increase to almost 30 percent.

Both Germany and Japan are snapping up much of the world's supply of solar panels. Japan's solar use is growing three times as fast as that of the US and Germany's twice as fast. "In Germany, they are literally paving farmlands, blocks of land as large as 10 city blocks, with solar panels," says Mike Eckhart, president of the American Council on Renewable Energy in Washington.

In fact, demand is strong for the panels. Rhone Resch, executive director of the Solar Energy Industries Association, estimates individuals who want to buy solar panels might have to wait as long as three months to get them.

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