Big Boosts Seen in Renewable Revenues, Investments
A flurry of new reports from consultants, industry officials and scientists paint a decidedly upbeat picture for renewable energy -- with the startling possible exception of electricity from Hoover Dam. The overall conclusion: Government policies and larger market trends are boosting the fortunes of non-traditional energy, even in the face of a stressed economy.
Experts, in analyses released over recent days, see mushrooming growth in both revenues and investments in alternative energy, including wind, solar, biofuels and fuel cells. One report produced by Clean Edge Inc., a West Coast research company, showed sales for those sectors worldwide had grown by 40 percent from last year, to $77.3 billion. The four sectors are likely to be valued at $254.5 billion by 2017, Clean Edge predicted (see press release here).
At the same time, Renewable Energy Policy Network for the 21st Century (REN21), an international research organization based in Paris, reported a nearly 30 percent increase in investments in renewable capacity, to $71 billion, over 2006. Almost half of that money was going toward wind power, according to the institution's press release and report.
But still another estimate went even further. Analysts at New Energy Finance, headquartered in London, calculated that total new investment in clean energy – which the firm defines as biofuels, biomass, geothermal, small hydro, wind, marine and solar – actually hit $148.4 billion in 2007. That figure is up 60 percent compared to the year before and is even higher than an estimate produced by New Energy in January that did not include some transactions reported until later. Venture capitalists, private equity investors and public market investors all played major roles, New Energy reported.
The influx of capital is “the big story here,” Ron Pernick, co-founder of Clean Edge, told Climate Law Update Tuesday. Clean Edge’s report, which also incorporated the New Energy findings, estimated venture capitalists poured $2.7 billion into clean-energy investments, nearly 10 percent of the total VC activity for the year.
“Clean energy has moved from the margin to the mainstream and the proof is in these numbers,” Pernick said in a statement announcing the report. “Amid last year’s plummeting housing prices, rising foreclosure rates and record high oil prices, clean energy continued to provide a bright spot in an otherwise sluggish economy.”
Wind constituted the largest component of the global increase in capacity, REN21 reported; solar voltaics connected to the grid comprised the fastest growing energy technology. The United States was the leader in new wind capacity added each year, as well as ethanol production, according to REN21. Clean Edge, meanwhile had figures showing wind power sales jumped by an estimated 68 percent in 2007 to $30.1 billion compared to a year earlier, equalling the generation of 20 conventional fossil-fueled plants.
Ethanol production also spiked in the United States, according to another report, this from the Renewable Fuels Association, an industry group. It estimated that the country produced 423,000 barrels of ethanol per day, an increase of more than 34 percent from a year earlier (see press release and economic report).
Meanwhile, a California company, Ausra, Inc., issued a report (view press release and report here), which concluded that more than 90 percent of the United States electrical grid and auto fleets’ energy needs could be met by solar thermal power. The company happens to be the developer of such technology, which uses fields of mirrors to generate heat and drive steam turbines.
Several forces appeared to be driving the global renewable industry’s numbers, experts noted. According to New Energy Finance’s press statement:
"Among the key factors pushing [the] numbers sharply upwards in 2007 were government policies around the world to promote renewable power and cleaner fuels, oil prices approaching $100-a barrel and rising corporate and investor awareness of the opportunities in clean energy.
One of the themes of 2007 was geographic diversification. Western Europe and North America continued to enjoy sharp increases in VC/PE, public market and project investment – but the momentum spread out to include other developed economic regions such as Eastern Europe and Australia. Even more significant was the pick-up in activity in emerging economies, with China moving strongly ahead with projects in wind, biomass and energy efficiency, Brazil seeing huge investment interest in its sugar based ethanol sector, and Africa starting to see renewable energy and efficiency as partial answers to its power shortages."
In speaking to Climate Law Update, Clean Edge's Pernick also cited the fact that while the costs of fossil fuels were on the rise, the technology used for wind and solar is getting cheaper. In addition, he said many governments are taking steps, such as imposing renewable portfolio standards requiring utilities to supply customers a certain amount of power from renewable sources. The governments, he said, are interested in attracting jobs and other economic gains.
“They’re competing to be clean tech leaders,” Pernick said.
He also noted that to reduce greenhouse gas emissions, public officials are moving toward establishing a price on carbon, either through cap-and-trade systems or other market means.
“There’ll be mandatory markets,” he said.
Investment, said experts such as Micael Liebreich, chairman and CEO of New Energy Finance, must accelerate. While 2007 was strong, he said in the company's statement, “on our estimate a further, fivefold increase is required for major countries to meet their own ambitious targets for reductions in greenhouse gas emissions.”
Clean Edge’s report, however, also warned that some clouds remain on the horizon. Those include the rising impact of biofuel production on food supplies and commodity agriculture prices and the uncertainty over production tax credits for renewables. And, despite the recent gains in renewables, they still represent only about 3.4 percent of global power generation, according to the REN21 report. That doesn’t include large hydropower projects, accounting for about 15 percent of the generation total.
Which brings us to Hoover Dam. And another new report, this one prepared by researchers at the Scripps Institution of Oceanography. According to a statement from the American Geophysical Union, which has accepted the paper for publication, the Scripps researchers have put 50-50 odds on Lake Mead, which lies behind the dam, running completely dry by 2021, given expected climate change scenarios and if future water demands are not reduced. That’s, of course, bad news for hydropower, since water from the lake pouring through turbines generates enough electricity for an estimated 1.3 million people in the West.
Meaning there might be even more riding on the development of the renewable industry.
(Photo of Hoover Dam: U.S. Bureau of Reclamation)
