Renewable Energy On The Rise
Michael Crumbliss for redOrbit.com
Global investment in renewable energy was a record high $257 billion in 2011, with solar leading the pack, according to two new reports on renewable energy trends issued by the United Nations Environment Program (UNEP) and the Renewable Energy Policy Network for the 21st Century (REN21). Global Trends in Renewable Energy Investment 2012 is the fifth edition of the UNEP report, based on data from Bloomberg New Energy Finance, and has become the standard reference for global clean energy investment figures.
Total investment in renewable power and fuels last year increased by 17% to a record $257 billion, a six-fold increase on the 2004 figure and 94% higher than the total in 2007, the year before the world financial crisis. Renewable sources have grown to supply 16.7 % of global energy consumption.
Of that, the share provided by traditional biomass has declined slightly while the share sourced from modern renewable technologies has risen. Renewable power, excluding large hydro-electric, accounted for 44% of all new generating capacity added worldwide in 2011 (up from 34% in 2010). This accounted for 31% of actual new power generated.
Achim Steiner, Executive Director of the United Nations Environment Program (UNEP) said, “There may be multiple reasons driving investments in renewables, from climate, energy security and the urgency to electrify rural and urban areas in the developing world as one pathway towards eradicating poverty-whatever the drivers the strong and sustained growth of the renewable energy sector is a major factor that is assisting many economies towards a transition to a low carbon, resource efficient Green Economy. ”
“This sends yet another strong signal of opportunity to world leaders and delegates meeting later this month at the Rio+20 Summit: namely that transforming sustainable development from patchy progress to a reality for seven billion people is achievable when existing technologies are combined with inspiring policies and decisive leadership. It is essential to continue government policies that support and nurture the sector’s growth, and to de-escalate damaging trade disputes.”
“Otherwise,” he warned, “the low-carbon transition could weaken just at the point when exciting cost reductions are starting to transform the economics.”
Manufacturers of solar panels and wind turbines face challenges even as the sector booms because prices are dropping. The price of all major renewable energy technologies continued to fall in 2011 — to the point where they are challenging fossil-fuel sources, even before climate, health and other benefits are factored in.
For example, it is predicted that the average onshore wind project worldwide will be fully competitive with combined-cycle gas turbine generation by 2016 even in the US, as gas prices are expected to rebound to a point where they cover the cost of extraction. Solar analysis suggests that the cost of producing power from rooftop PV panels for domestic use is already competitive with the retail (but not the wholesale) daytime electricity price in several countries including Germany, Denmark, Italy and Spain, as well as the state of Hawaii.
The dominant reason for the price declines was that manufacturer margins were compressed as the industry continued the shift from a period of under-capacity a few years ago, to overcapacity now as growing demand failed to keep up with a surge in supply.
The most spectacular price plunge was in PV cells, whose average price fell from $1.50 per Watt in September 2010, to $1.30 per Watt by January 2011 and $0.60 per Watt by the end of the year, according to the Bloomberg New Energy Finance Solar Price Index. This fed into a fall in PV module prices of nearly 50% between the start of 2011 and the beginning of this year.
Michael Liebreich, Chief Executive of Bloomberg New Energy Finance, compared the current renewable manufacturing sector to the emerging auto industry at the beginning of the 1900’s. He stated, “We are entering a fascinating period, with clean energy’s costs starting to be competitive with fossil fuels. The challenge for policy-makers is to reduce support mechanisms at just the right pace – too fast and the long-term future of the industry will be harmed. Too slow and you do the world’s taxpayers and energy consumers a great disservice.”
“Right now we are seeing a lot of pain on the supply-side as prices are being compressed, but it is important to remember than installers, generators and consumers are benefiting. It is all part of the maturing of the sector,” he says.
“In 1903, the United States had over 500 car companies, most of which quickly fell by the wayside even as the automobile sector grew into an industrial juggernaut. A century ago, writing off the auto industry based on the failures of weaker firms would have been foolish. Today, the renewable energy sector is experiencing similar growing pains as the sector consolidates.”