Ron Pernick is co-founder and managing director of Clean Edge Inc. The San Francisco area-based consultant and researcher creates indexes to track various segments of the clean energy industry. One of its benchmarks serves as the basis for the PowerShares Global Wind Energy Portfolio (NASDAQ: PWND).  

IndexUniverse.com's Murray Coleman caught up with Pernick recently at Clean Edge's offices in Portland, Ore., working on development of a new index series expected to be unveiled by year's end.

IU.com: What do the correlations between conventional energy pricing trends and alternative energy trends show now?

Pernick: Conventional energy prices are extremely volatile. Over time, you can make the case that those will continue to increase, especially oil. On the other hand, clean energy prices in general have been going down. Solar power is a very striking example. For every doubling of solar PV modules [the technology used to convert sunlight into electricity], there's about an 18% decline in pricing.

IU.com: Is that a big change from past years?

Pernick: In 2007, for the first time, the solar industry started using more silicon than the high-tech semiconductor industry. From 2006 through 2008, we saw a significant shortage of silicon. But that three-year period is ending, which will further help to reduce costs of solar energy going forward. Some of the large manufacturers such as Suntech Power (NYSE: STP) last year started initiating price reductions of around 25% on solar cells and panels. And we're seeing more price reductions this year. That bodes well for the solar industry and solar PV modules in the future. We're also seeing companies like First Solar (Nasdaq: FSLR) delivering thin-film solar technologies now that are cheaper. That's a neat twist in the non-silicon, new chemistries market.

IU.com: How about wind energy?

Pernick: Over the past 30 years, we've seen a reduction in pricing in wind power. But now it's stabilizing. We probably won't see significant ongoing wind reductions in terms of costs. It could decrease slightly or remain stable. The key is that wind power has taken a maturation path where there are large players who've been working on large projects for years. Those include companies such as GE (NYSE: GE) and Siemens AG (NYSE: SI).

IU.com: As clean energy costs go down, how much will its usage escalate?

Pernick: My crystal ball is no better than anyone else's might be at making predictions. But many drivers are in place to increase usage in the United States. More than two dozen states already have renewable portfolio standards, which require states to produce clean electricity at certain levels. For example, California is requiring 33% of all electricity produced in the state to come from renewable sources by 2020. And a number of states are pegging that rate at 20-25% by 2025. Today, between 8-10% of our electricity generation in the U.S. comes from renewable energy. That figure includes hydropower. It's important to remember that most of these state mandates don't include hydro.

IU.com: What do you see as the biggest gainers from such a development?

Pernick: There's no doubt wind is going to be a big benefactor of this push on a statewide level. There are 12 states, in particular, that appear to be well-positioned. Those include Texas and Iowa, of course, along with almost anywhere across the Great Plains. Also, the three Western states stand to gain along with those in the Eastern coastal parts of the country. Wind prices are relatively stable now, which is a plus for states looking to plan projects on a larger scale.

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