Clean Energy Trends 2004

Clean-Energy Trends 2004

The following is an excerpt from Clean-Energy Trends 2004. To read the full report, please download the PDF file by clicking on the link to the left.

You wouldn't know it from the energy policy debates taking place in the U.S. and other countries, but renewable energy represents the world's second-largest source of electricity. According to the International Energy Agency, clean-energy sources -- including hydro, biomass, geothermal, wind, solar, and tidal power -- accounted for 19% of global electricity produced in 2000, compared with 39% for coal, 17% each for nuclear and natural gas, and 8% for oil.

But the numbers are deceiving. Hydro power, which in large-scale systems can be less than environmentally benign, accounts for the lion's share -- 90% -- of renewables' contribution. And solar and wind, while growing significantly each year, accounted for less than 1% of the total.

As usual: another year of good news/bad news for clean energy.

How to change this dynamic? For solar, wind, and other non-hydro renewable energy sources to contribute significantly to global electricity supply will require that several key technology, policy, and investment trends be enhanced and expanded: renewable-energy technology will need to continue its steady improvement; more supportive government policies, such as renewable portfolio standards and tax credits, will need to be implemented; and government, industry, and venture capitalists will need to pump more dollars into the R&D and market-development pipelines. And all of this needs to happen at the right time, in the right markets, in the right order.

Clearly, winning this clean-tech trifecta will be no small feat. But there are some encouraging signs.

It's easy to take solace from the growth of renewables over the past few years, though the impressive numbers need some context. Solar and wind power generation capacity have each grown by an average of more than 30% annually over the past five years, growth rates more commonly seen in the high-tech worlds of personal computers and the Internet than the more staid energy sector.

The solar photovoltaics (PV) industry, for example, grew to more than 700 MW of new solar PV manufacturing output in 2003, up from about 500 MW the year before. Wind added more than 7,500 MW of new generation capacity last year; it now accounts for more than 38,000 MW of total installed capacity worldwide, enough electricity to power approximately 19 million average European homes.

But the installed base of both technologies remains relatively small, tempering the impressive growth data. Put in terms of the personal computer industry, it's still only the mid 1980s: the technology is catching on, and prices, performance, and ease of use are improving, but it has yet to reach a critical mass.

That part of the growth curve is yet to come. According to Clean Edge research, solar photovoltaics (including modules, system components, and installation) will grow from a $4.7 billion industry in 2003 to more than $30.8 billion by 2013. Wind power (new installation capital costs) will expand from $7.5 billion in 2003 to approximately $47.6 billion in 2013. And the fuel cell and distributed hydrogen market will grow from a $700 million industry today (primarily still for research, demonstration, and testing) to $13.6 billion over the coming decade.

Combined, these three high-growth clean-energy markets have expanded from $9.5 billion in 2002 to $12.9 billion today, or a combined annual growth rate of 36%. By 2013, solar PV, wind power, and fuel cells and hydrogen infrastructure will represent a $92 billion market.

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