By: Ron Pernick
The American Council on Renewable Energy (ACORE) likes to say that we are in Phase II of renewable energy development. In this worldview, the past 30 years were about developing core clean-energy technologies, and the next couple of decades will be about focusing the nation's efforts on putting (as ACORE says on its web site) "these new technologies to use in our society, with benefits for energy supply, national security, economic growth, investment, jobs, a cleaner environment, reduced risk of climate change, and improved health." I couldn't agree more. We are moving into the next stage of clean- energy technical, financial, and policy development. And I believe it will be all about scaling up. Clean energy is moving so far beyond the "alternative" moniker that many regions and states are now targeting 20 percent or more of their energy from clean-energy sources within the next decade or two - representing more electricity generating capacity than natural gas in many regions. Even China is targeting significant amounts of renewable energy. China's Renewable Energy Law is targeting 120 GW of new renewable by 2015 (representing three times the amount of nuclear power currently on the drawing boards). So, will clean energy technologies like solar, wind, and biofuels and its efficiency brethren like green buildings, light emitting diodes (LEDs), and the smart grid be the dominant form of global energy generation (and conservation) by 2020? Perhaps not. But will they represent the highest growth and innovation opportunity in the energy sector and double-digit chunks of our energy infrastructure? Absolutely! Just look at the numbers to put this "scale up" in perspective. Back in 2003 the solar industry was valued at less than U.S. $5 billion globally with around 600 MW of solar manufactured worldwide. By 2006 that number had approached U.S. $16 billion with more than 2 GW of solar manufactured globally. Now, companies like German-based SolarWorld are announcing plans for 500 MW solar manufacturing facilities (in the U.S. nonetheless) - nearly equal in size to the total global manufacturing output (among all manufacturers) just five years ago. Wind power, which in 2003 represented just 8000 MW worldwide of new installed generation capacity, nearly doubled to more than 15,000 MW in 2006. Just last month T. Boones Pickens announced plans for a 4000 MW wind power plant - that's equal to the total annual global install less than a decade ago. FPL recently announced that it will develop 10,000 MW of new wind power projects between now and 2012. What will this inevitable scale-up mean to the industry? Well, we're certain to see increased M&A activity as multinationals with clean- energy interests like ADM, Applied Materials, FPL, GE, Honda, Sharp, and Toyota work to maintain or build their leadership positions. And of course, we'll see a slew of public offerings. In just the past year such companies as First Solar, Comverge, and Enernoc have gone public - with many other companies waiting in the wings. And performance for the sector hasn't been bad. Between the beginning of the year and the end of July the NASDAQ Clean Edge U.S. Liquid Series index (CELS), a benchmark index designed by Clean Edge and NASDAQ