In contrast to projections for natural gas, there is no consensus regarding future renewable energy costs. Table 1 presents a 1995 DOE forecast for the latter, but both more and less optimistic projections by other analysts also exist.¹¹ Nevertheless, DOE projections support the following conclusions:

1.	Renewable energy costs will continue to decline and, in contrast to the recent past, little of that decline will be offset by falling gas prices.
2.	Within the next decade, one or more renewable technologies are likely to reach price parity with natural gas in important segments of the U.S. electric generation market.
3.	For the broader range of renewable energy sources, price parity in the American grid-connected market lies farther in the future. However, the market for grid-connected renewables appears more robust overseas.

An important advantage of renewable energy technologies is that they remove the risk of energy bills that rise without notice and obviate the cost of financial tools to hedge that risk.

However, simple projections of average prices do not fully capture the advantages of many renewable energy technologies. These advantages include soft environmental impact and insulation from price volatility. While renewable energy systems typically cost more per unit of capacity than gas-generating technology, this disadvantage is partially offset by their use of free fuel (except for those that convert non-waste biomass crops). Not only is the future price of gas uncertain, but it probably will be volatile, swinging both below and above a gradually increasing trend.¹² Energy users can hedge these risks by signing long-term gas supply contracts. However, such contracts add to the operating costs of gas and may not be available for those who use very small quantities of gas. Indeed, many electric utilities use fuel adjustment clauses to pass fluctuations in the price of fuel directly to consumers. In short, an important advantage of renewable energy technologies is that they remove the risk of energy bills that rise without notice, and they obviate the cost of financial tools to hedge that risk. Renewables will be more competetive in energy markets that account for such characteristics.

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