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Energy 18 2014 Economic Forecast www.wbjournal.com Worcester Business Journal 18 2014 Economic Forecast www.wbjournal.com Worcester Business Journal 5 Things To WaTch Will Oil Slowly Go The Way Of The Dinosaur? 4 5 Here's what to expect in 2014: Slightly Higher — But Still Cheap — Natural Gas Prices Fracking, the technology that harvests natural gas from the ground by using water, sand and chemicals, has become more prevalent in recent years. As a result, a much larger supply of it is within reach. That has led to record-low prices, and cheaper electricity too, since many utilities generate power using natural gas. In 2012, the average natural gas price was $2.75 per million British thermal units (MMBtu), according to the U.S. Energy Information Administration (EIA), while the projected average for 2013 is $3.69. In 2014, the average price will rise slightly, to $3.78, according to EIA. Meanwhile, the American Gas Association (AGA) predicts pricing will settle at between $4 and $6 per MMBtu in the next decade, as new demand for natural gas increases over that for oil. Chris McGill, a policy analyst at AGA, said consumers will start see- ing those slightly higher prices in 2014 because of the associated delivery costs. "As we increase the demands on natural gas, even though we have a very elastic supply position to meet those demands … you still have to drill wells, you still have to go out and get the gas," McGill said. More Affordable Renewable Energy Before the renewable energy market had time to mature, most people and businesses investing in renewable ener- gy, like solar photovoltaic systems, were those that had the capital and the drive to reduce their carbon footprints. But lately, systems are becoming more affordable because the market is more mature than it was five years ago. With more players, it costs less to manufacture the systems, and that savings is passed on to the consumer. Of course, renewable energy was always deemed more cost effective than traditional energy, because it was generated from sources like the sun and wind, and often, systems generate enough power that own- ers can sell the excess back to the grid. But as the market matures, the return on investment will be quicker. More Communities Hosting Private Solar Arrays It's likely that more municipalities will begin to strike deals with renewable energy companies, allowing them to build renewable energy systems on town property in exchange for tax payments. Boston-based renewable energy company First Wind announced such arrange- ments with Millbury and Warren in September; those towns allowed First Wind to construct solar energy projects to generate power for the University of Massachusetts Lowell. Millbury and the town of Orange also agreed to buy a portion of the power generated by the systems. As towns struggle to pay for public projects and support their public schools without raising taxes on residents, such arrangements will likely be seen as attractive, alternate funding sources. Adoption Of Cleaner Fuel Shrewsbury livery company Knight's Airport Limousine helped lobby to change longstanding state legislation this year that prevented vehicles pro- pane-powered from traveling through Boston tunnels (decades ago, they were deemed a safety hazard), in order to upgrade its fleet with propane fuel tanks. The cleaner, cheaper option was attractive to Owner Michael Hogan, not just because it would save him hundreds of thousands of dollars annually, but because he wanted to reduce his company's carbon footprint. The change opened doors for other companies with large fleets to make the switch, and it comes at a time when the use of cleaner, alternative fuel is becoming more popular nationwide. In 2010, there were 938,643 alternative fuel vehicles on the road, compared to 695,763 in 2007 and 533,999 in 2003, according to the U.S. Department of Energy. More Lending For Renewable Energy Projects Traditional financing for renewable energy projects has been difficult to come by, as lenders have taken a while to warm up to the relatively new technology. "It just seems a little more consumer and home- owner friendly," said Craig Roy, senior vice president of retail lending for Digital Federal Credit Union (DCU) of Marlborough. The technology has also been proven, which is why DCU felt comfortable enough to announce a new deal to provide up to $100 million in financing for residen- tial solar power projects. As the lead credit union bankrolling the program, DCU will work with the homeowner directly. So far, Roy said between $3 mil- lion and $4 million in loans have been approved, and if it's successful, the program may expand. n T here are indications that the energy picture in the United States is becoming more favorable, from both environmental and economic viewpoints. With cleaner and cheaper energy sources becoming more viable, the U.S. energy mix will con- tinue to shift in 2014 and over the next decade, away from the less clean and more costly oil and more toward commodities like natural gas and propane, as well as renewable sources, particularly solar. 1 2 3 25 26 27 28 29 30 2008 2009 2010 2011 2012 Supply (In million cubic feet) 30M By emily micucci Worcester Business Journal Staff Writer The supply of natural gas in the United States rose 7 percent from 2008 to 2012. More Natural Gas Source: U.S. Energy Information Administration