INDUSTRY I ANALYSIS C
lean energy, with double-digit growth rates and competition spanning Europe, Asia, and the
Americas, has been a dynamic and forward-looking industry for more than a decade. The year 2011, however, will not likely be remembered for this robust growth and global activity, but for the now-infamous Solyndra bankruptcy. The failed company, which represents a potential loss in excess of $500 million for American taxpayers, has become a rallying cry for many as an example of government gone wrong.
For clean-tech critics, Solyndra encapsulates everything bad about government largesse and “proof” that clean tech can’t compete without subsidies and government regulations. Stinging headlines and partisan attacks have left many in the clean-tech community caught off guard, as the industry has become a modern-day whipping boy for all that ails the U.S. economy. But these criticisms, offered up in sound bite-sized nuggets delivered more for their impact than accuracy, miss several key points:
Oil, gas, and coal receive massive subsidies Mature fossil fuel industries have historically received, and continue to garner, six times as many subsidies as the clean- energy industry globally. While subsidies might make sense for emerging sectors – that’s what subsidies have traditionally been used for – ongoing support for oil and gas industries no longer makes sense. Nor, according to groups like the International Energy Agency and World Bank, are they prudent from an economic, environmental, or energy security perspective.
Venture capital is a risky business Venture backed companies, no matter what the industry, naturally come with a high-risk profile. For every VC-funded home run (think Google, Amazon, and Apple), VCs expect to back many companies that don’t make it big or fail altogether. You can question whether government should be placing such bets, but there’s no denying that such risk is part of the capitalist system, and something that’s historically been revered, not reviled, by business leaders and politicians alike.
Nuclear requires more in loan guarantees Two new nuclear power plants at the Vogtle complex in Georgia recently received a conditional commitment for an $8.3 billion loan guarantee from the U.S. government. This loan amount is equivalent to more than 15 Solyndras, and the two plants alone equal nearly a quarter of all recent DOE loan guarantees. This one guarantee, based on its sheer size and the long history of nuclear power plant public opposition, delays, and closures, puts taxpayers at far greater risk than perhaps any other project.
2011 points to a scale up of clean tech Some major developments that went under-reported in 2011 include landmark changes in Germany and massive investments by notable investors. Germany, for example, in the aftermath of the Fukushima Daiichi nuclear disaster, announced plans to shutter all of its nuclear plants by 2022 while expanding of renewables, efficiency, and natural gas- embarking on perhaps the most aggressive clean-energy build out seen to date. And a number of noted investors upped their clean-tech investment activities, with Google and Warren Buffett’s MidAmerican Energy Holdings investing nearly $1 billion and $2 billion respectively in
U.S. solar projects. Clean tech isn’t withering on the vine as some would proclaim, but instead is continuing its rapid expansion, witnessed by the growth of green buildings, smart meters, hybrid electric vehicles, distributed and centralized renewables, LED lighting, and a host of other clean-tech breakthroughs that are becoming increasingly ubiquitous.
There have been growing pains for many firms, with low-cost manufacturing in China and elsewhere giving U.S. and European manufacturers a not-so insignificant run for their money, but the industry as a whole has continued to expand throughout the economic downturn of recent years. Combined global revenue for solar PV, wind power, and biofuels, for example, surged by 31 percent over the prior year, growing from $188.1 billion in 2010 to $246.1 billion in 2011. The bulk of this expansion came from double-digit growth rates for both wind and solar deployment, along with an increase in pricing for biofuels.
Solar photovoltaics (including modules, system components, and installation) increased from $71.2 billion in 2010 to a record $91.6 billion in 2011. We project the market to continue to expand to $130.5 billion by 2021. These market numbers, while impressive, do not fully capture the extent of actual industry expansion. While total market revenues were up 29 percent, installations climbed more than 69 percent from 15.6 GW in 2010 to more than 26 GW worldwide last year. This reflects a more than 40 percent decline in crystalline module prices between 2010 and 2011. Between now and 2021 we project that installed costs for PV will continue to decline, falling to nearly one-third of their current levels.
Wind power (new installation capital costs) is projected to expand from $71.5 billion in 2011, up from $60.5 billion the prior year, to $116.3 billion in 2021. Last year’s global wind power installations equaled 41.6 gigawatts, the largest year for global installations on record. China remained the global leader in new installations for the fourth year in a row, installing more than 40 percent of all global wind turbines, or 18 GW in total. The European Union came in second with nearly 10 GW, followed by the U.S., India, and Canada with approximately 7 GW, 3 GW, and 1.3 GW respectively.
Biofuels (global production and wholesale pricing of ethanol and biodiesel) reached $83 billion in 2011, up from $56.4 billion the prior year, and are projected to grow to $139 billion by 2021.
Table 1: Global Clean Energy projections to 2021 Issue III 2012 I
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