It turns out that 2008 was another record year for clean energy. According to Clean Edge’s just-released Clean Energy Trends 2009 report, the three major clean-energy sectors — solar photovoltaics (PV), wind power and biofuels — kept up a blistering growth rate, increasing 53 percent from $75.8 billion in 2007 to $115.9 billion in revenues in 2008.
The report shows that this significant increase in revenue was due to continued growth in solar PV, wind and biofuels deployment globally. For example, solar PV expanded from 2.8 gigawatts (GW) installed in 2007 to 4.2 GW in 2008. Over the same time frame, biofuels increased from 15 billion gallons to nearly 20 billion gallons, with Brazil using more gallons of ethanol than petrol-based gasoline for the first time. Wind power expanded from 20 GW installed in 2007 to 27 GW in 2008, with the U.S. becoming the largest generator of wind energy in the world after bringing on nearly a third of last year’s global total (8 GW).
We don’t expect to see a repeat performance of such installation or revenue growth in 2009. We project that clean-energy revenues will remain level or decrease slightly, until several key factors begin to turn around. The initial public offering (IPO) market must regain steam — last year saw only 43 total IPOs in the U.S. that raised at least $50 million, compared with 272 one year earlier. As in most other sectors, the credit crisis needs to ease for money to start flowing again for project deployment and new manufacturing facilities. And stimulus-related monies and policies must start to have a direct impact on the market.
As many businesspeople, homeowners and others can attest: 2009 will be a year to “get through.”
The clean-energy industry has primarily been a good-news story — what other industry has sustained annual global growth rates exceeding 30 percent for the past decade? But clean tech, as noted above, isn’t immune to or isolated from the forces impacting the broader economy. Yet new government spending, regulations and policies should help the sector weather the current economic crisis better than most. On balance, we believe that clean energy and energy intelligence will be seen as a means to help economies around the world pull out of the current economic malaise, and we project that our three tracked sectors (solar PV, wind and biofuels) will expand to $325 billion in global revenue by 2018.
Indeed, contrary to concerns that a depressed economy would negatively impact government investments in clean energy, many political leaders around the world are making clean energy a central tenet of their economic recovery efforts. A recent Deutsche Bank Group DB Advisors report entitled Global Climate Change Regulation Policy Developments counted more than 250 climate-change-related policy developments between July 2008 and February 2009 by governments around the globe. In that same period, governments committed approximately $200 billion in stimulus spending for clean-energy and climate-related activities such as green buildings, grid improvements, renewables and public transportation, according to the report.
So where do we go from here? What will it take to keep clean energy on its growth track?
The U.S. stimulus package, named the American Recovery and Reinvestment Act of 2009, is a good place to start. It includes more than $70 billion in direct spending and tax credits for clean-energy and transportation programs, including $11 billion towards smart grid; $4.5 billion to make federal buildings more energy efficient; $2 billion in grants for advanced batteries for electric vehicles; $8.4 billion for mass transit and $20 billion in tax incentives and credits for renewable energy, plug-in hybrids and energy efficiency.
To back up these investments, a number of recently passed U.S. policies are poised to support the growth of clean-energy sectors in the U.S. These include an 8-year extension of the investment tax credit (ITC) for solar; a 3-year extension of the production tax credit for wind; new rules that allow utilities, for the first time, to participate in ITCs and a new provision that allows renewable energy developers to receive up to a 30 percent government grant instead of a tax credit. The U.S. is poised for additional supports, including the likely passage of a national renewable portfolio standard and the potential for a cap-and-trade system for carbon emissions.
Another promising development: clean-energy prices are starting to come down. In the past year, we’ve seen PV module prices drop by more than 15 percent for some manufacturers’ offerings — and we could see prices drop another 20-30 percent this year. Just this month, thin-film leader First Solar announced that its production costs had dropped below the $1 per watt barrier. And wind power, in many instances, is now the lowest priced and most easily deployed low-carbon energy source available. Indeed, the long-held promise of clean energy being price-competitive with conventional offerings is no longer a pie-in-the-sky dream, but an awakening reality.
“We know that the country that harnesses the power of clean, renewable energy will lead the 21st century,” exclaimed President Barack Obama in his address to Congress in February. And he isn’t alone in this sentiment. Heads of state, regional government leaders, financial titans and corporate leaders all increasingly view clean energy and clean tech as our best hope for economic recovery.
In a mythical sense, out of the burning ashes of our crumbling post-industrial economy is emerging a new phoenix. Times of unprecedented chaos and crisis (which we are undoubtedly in) call for serious, purposeful response, vision and action. While it won’t be easy, we believe that cities, nations, businesses, investors and individuals will rise to the challenge of forging a new clean-energy economy.
Ron Pernick is co-founder and managing director of clean-tech research and publishing firm Clean Edge, Inc. and co-author of the highly acclaimed business book The Clean Tech Revolution (Collins Business). He is also Sustainability Fellow at Portland State University’s School of Business where teaches a course on clean-tech innovation and entrepreneurship. Clean Edge’s annual Clean Energy Trends 2009 report is available for free download at www.cleanedge.com.