Wind turbines © Photodisc Red, Getty Images

The U.S. is at an economic and cultural crossroads when it comes to energy. In the span of a generation, the idea of capturing power from sources other than fossil fuel or nuclear energy has gone from utopian nonsense to being widely incorporated into the national grid.

But now the country is also producing fossil fuels at rates not seen in years, which is putting the alternative energy sector in a familiar bind -- because whenever fossil fuel prices fall, interest in alternatives tends to dry up.

Still, the progress to date has been remarkable. According to the National Renewable Energy Laboratory (NREL) in Colorado, renewables such as wind, solar, biofuels and other alternative sources currently account for 12% of the total U.S. energy supply, and 13% of all power generated. In some parts of the country, renewable energy has even become commercially competitive with traditional oil and gas production.

While that doesn't mean the U.S. will end its addiction to fossil fuels any time soon, it does mean we have a wider array of energy sources.

Wind, for example, generates about 4.5% of all electricity in the U.S. -- compared to around 1% or less just five years ago. Last year, a record of more than 13,000 megawatts of wind-generated energy capacity was installed. Still that's a modest number, given that 1 MW can power just several hundred homes and the U.S. has total generating capacity of over 1 million MW. But experts say it's a good start.

"We installed more (wind power) than the Chinese did last year," Jeffrey Logan, senior energy analyst at NREL, told MSN Money. "And a very large supply-chain infrastructure has now emerged in the U.S. to support that kind of manufacturing and deployment."

Giving wind energy further momentum, in early June Secretary of the Interior Sally Jewell, along with the director of the Bureau of Ocean Energy Management, announced the government will auction leases for offshore wind farms along the New England coast in an area about 9 nautical miles off Rhode Island and Massachusetts. That will be the first offshore wind energy project to be developed in the U.S. and could produce more than 3,400 megawatts -- enough to power more than a million homes.

Solar energy remains a distant second to wind and accounts for less than 1% of all electricity production in the U.S. But Logan notes it's also making record progress, with just over 3,000 MW of solar photovoltaics (p.v.) installed in 2012.

Many traditional energy companies and other businesses are acknowledging the need for diversified renewable energy sources and are aggressively investing.

General Electric (GE), for example, is one of the world's leading producers of wind turbines and a major player in solar energy research and development. And while European and Chinese firms like Seimens (SI) and Yingli (YGE) are also looking to dominate wind and solar, Logan says America still has an innovation edge. "The U.S. is a leader among everyone in the world in what's called thin-film photovoltaics," he notes. "These technologies have the opportunity to be produced at much lower costs than traditional, silicon-based p.v."

Utilities are also investing in renewable energy. Xcel Energy (XEL), which supplies power in eight Midwestern and Western states, owned and operated three wind farms producing 4,900 MW on its system at the end of last year. On one day in late 2011, Xcel set a world record for electricity from wind power, when nearly 56% of the juice consumed by its 1 million customers in Colorado came from wind farms.

But utilities also see renewables as a future threat to their traditional business models, especially if growing numbers of consumers declare their own energy independence and start installing their own solar panels or wind turbines. And while it's hard now for renewables to compete against the current shale oil boom, they still hold some powerful advantages.

"The public good in this whole thing," said Logan, "is that we can be certain that we'll have a varied and appropriately risk-diversified group of energies that we can rely on in the future. That will help us no matter what happens to the climate or to the economy or to the shale revolution or whatever."

This article is part of an MSN Money special report on America's quest for energy independence. Up next: 10 weird energy sources that could change the world.

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