Change is afoot in the global clean-energy market. According to our Clean Energy Trends 2014 report released on March 26, the year 2013 marked a significant tipping point in the history of clean energy. For the first time since Clean Edge began tracking global markets in 2000, the world installed more new solar photovoltaic generating capacity, 36.5 GW, than wind power (35.5 GW). Record levels of new solar deployment in China, Japan, and the U.S., combined with a down year in the wind industry, enabled this unprecedented crossover.
Although total global wind power capacity remains nearly 2 1⁄2 times the size of solar (and wind is still slightly larger than solar in terms of dollar market size – see table below), projected double-digit growth rates in solar throughout the next decade mean that wind will not stay No. 1 in cumulative deployment indefinitely. With the installed cost of solar expected to fall around seven percent annually, Clean Edge projects that by 2021, global cumulative installed solar PV capacity will reach 715.8 GW, surpassing wind power’s projected 697.3 GW in that year.
In terms of the overall global clean-energy market in 2013, solar’s continued double-digit growth of 18 percent, plus a modest uptick in biofuels, was not enough to overcome the wind industry’s lackluster performance. As a result, combined global revenue for solar PV, wind power, and biofuels held nearly steady in 2013 at $247.6 billion, down slightly from 2012’s $248.7 billion. We project that these combined clean-energy sectors will continue to grow over the next 10 years, expanding to $397.9 billion in 2023.
Some additional top-level findings from this year’s report include:
- Solar photovoltaics (including modules, system components, and installation) grew to $91.3 billion from $79.7 billion in 2012 (with a record 36.5 GW installed globally as noted earlier). In contrast to 2011 and 2012, when PV panel costs plummeted more than 20 percent in both years, prices held nearly steady last year, dropping slightly to $2.50 per watt installed.
- Wind power (new installation capital costs) fell to $58.5 billion from $73.8 billion in 2012. The industry added 35.5 GW of new capacity in 2013, well below the previous year’s record 44.7 GW and its weakest performance since 2008.
- Biofuels (global production and wholesale pricing of ethanol and biodiesel) rose slightly, from $95.2 billion in 2012 to $97.8 billion last year. Global biofuels production remained constant at 31.4 billion gallons, with average prices increasing slightly.
- Venture capital investments in U.S.-based clean-tech companies totaled $4.4 billion in 2013, falling 25 percent from $5.8 billion in 2012, according to data provided by Cleantech Group.
- For the first time, Clean Edge expanded the scope of our global market size research to include green buildings and electric and hybrid vehicles. Since 2000, these sectors have experienced compound annual growth rates of 68.9 percent and 38 percent respectively.
And as in earlier years, this year’s edition highlights five major trends to watch:
1. Enlightened Utilities Begin To Embrace Distributed Energy Assets
2. Cities Lead Climate Charge by Focusing on Regional Carbon Reduction
3. Net Zero Energy Buildings Gain Ground
4. Internet-Enabled Clean-Tech Startups Define a New Sector
5. Vertical Farming Sprouts in Cities Around the World
Last year’s global clean-energy picture was a classic good news-bad news story, with dazzling growth, success stories, and rising stock prices in some sectors, and downward trends and policy and finance hurdles in others. As the industry continues to mature and makes its presence felt among decades-old, fossil-fuel energy sources, it faces a host of unprecedented challenges and opportunities. Among these are a transition away from early-stage venture capital investments to corporate and later-stage project financing sources; the shift away from nuclear power in Germany, Japan, California, and elsewhere; and pushback from some utilities and regulators (especially in the U.S.) who perceive distributed generation as a significant threat to long-established business models.
This mixed-signals theme continued into early 2014, when 60 Minutes aired a controversial segment called “The Cleantech Crash,” on the first Sunday in January, starting the year by rehashing old themes of clean tech as a government boondoggle and venture capital investment disaster. The piece galvanized a significant clean-tech industry backlash against what was viewed as an inaccurate hit piece, most notably by VC icon Vinod Khosla, who featured prominently in the broadcast. Yet one week later, Google announced the acquisition of smart thermostat maker Nest Labs for a whopping $3.2 billion (nearly as much money as all venture capital invested in clean tech in the U.S. in 2013).
After watching and analyzing the clean-tech sector for the past 15 years, I can pretty much guarantee that change will continue to come in fits and starts. And just as solar is jockeying with wind for a leadership position, so the entire clean-tech industry – renewables, green buildings, hybrids, EVs, and more – is now competing with the dominance of entrenched industries (case in point: the emergence of Tesla Motors as a major American automaker). While the full picture is just coming into view, one thing seems clear to me, a changing of the guard is coming.
The full Clean Energy Trends 2014 report is available for free download at www.cleanedge.com/reports.
Ron Pernick is founder and managing director of research and advisory firm Clean Edge and the coauthor of two books on clean-tech business trends and innovation, Clean Tech Nation (HarperCollins, 2012) and The Clean Tech Revolution (HarperCollins, 2007).