| Renewable electric power is beginning to soar. The | | | | Solar PV is hot, too. It works by converting sunlight |
| current surge of activity, which has been accelerating | | | | directly into electricity using semiconducting materials |
| over the last few years, is driven by several factors: | | | | such as polysilicon. Global solar PV installations have |
| high fuel prices; ongoing improvements in renewable | | | | grown by an average annual rate of 35 percent over |
| power technologies; and increasing political support, | | | | the last five years. Germany, Japan and the U.S. are |
| which grows out of concern about energy security | | | | the leaders in solar PV use, combining to account for |
| and climate change. | | | | 85 percent of the global installed base of more than |
| Although renewable power is still generally more | | | | 6 GW. PV installations in the U.S. grew by over 20 |
| expensive than electricity generated from fossil fuels, | | | | percent last year due to the expansion of federal |
| the cost of renewables has declined significantly. | | | | and state support. |
| Moreover, energy investment decisions are | | | | Solar PV is also on the rise in Asia, particularly in |
| increasingly made not solely on an economic basis, | | | | China, which is positioned to emerge as one of the |
| but with environmental and sociopolitical | | | | world's largest solar PV manufacturers and |
| considerations factored in as well. | | | | consumers over the next several years. |
| It's taken a long time to get here. Three decades | | | | The surge in wind and solar PV over the last several |
| and $30 billion of research funded by the United | | | | years is creating its own obstacles. The wind industry |
| States and other industrial countries have gone into | | | | is currently struggling with turbine component |
| renewables, along with billions more from the private | | | | shortages. These shortages have driven up the |
| sector. The effort has been marked by | | | | installed cost of wind turbines from as low as $1,100 |
| booms-and-busts, ups-and-downs in research funding, | | | | per kilowatt a few years ago to $1,500 or higher |
| disappointment and long dry periods. But after | | | | today-if you can find them. |
| languishing for many years on the fringe, renewable | | | | Polysilicon demand from PV manufacturers is now |
| power is now headed into the mainstream. | | | | greater than demand from the semiconductor |
| Renewable power technologies generate electricity | | | | business, and there is simply not enough silicon |
| using natural regenerating resources such as sunlight, | | | | production capacity today to meet these twin |
| wind and waves. Traditional renewable power | | | | sources of demand. |
| technologies include hydro, geothermal and biomass. | | | | This has created a shortage and driven up prices. |
| Familiar to most people, hydro power involves the | | | | Polysilicon prices exceeded $100 per kilogram in 2006, |
| use of dams and running water to drive electric | | | | up from $35 per kilogram a few years ago. These |
| turbines. | | | | shortages are expected to persist until 2008, when |
| Geothermal systems capture steam and hot water in | | | | new wind turbine component and silicon |
| geologic reservoirs to generate electricity. Biomass | | | | manufacturing capacity comes on line. In the |
| plants burn forest products and agricultural residues | | | | meantime, technologists are seeking to find ingenious |
| to produce steam to accomplish the same. These | | | | ways to innovate around these shortages. |
| traditional renewable power technologies account for | | | | The rapid growth in renewable power has been |
| more than 90 percent of global renewable power | | | | accompanied by an associated increase in investment. |
| capacity and are growing at a modest pace. | | | | According to New Energy Finance, investment in |
| The menu is being widened with more exotic | | | | clean energy reached $70 billion in 2006, up from $50 |
| technologies. Concentrated solar power plants use | | | | billion in 2005. Venture capitalists are now focusing on |
| mirrors to focus sunlight and boil a fluid to produce | | | | this sector as well. According to the Cleantech |
| steam to drive a turbine. Enhanced geothermal | | | | Venture Network, the North American venture capital |
| systems produce electricity with steam made from | | | | community invested $758 million in wind and solar |
| water that is injected into the earth and heated by | | | | startups in 2006, a threefold increase from 2005. |
| contact with hot rocks. Biomass gasification plants | | | | Policy uncertainty and fossil fuel prices are among the |
| turn biomass into a gas that can be used in a | | | | biggest threats to renewable power in the short and |
| combined-cycle generator. These technologies have | | | | medium terms. Renewable power options have yet |
| great potential, but are still developmental. | | | | to achieve cost parity with fossil fuel sources, |
| Wind turbines and solar photovoltaic (PV) cells occupy | | | | although some wind projects are competitive today |
| the middle ground between the traditional renewable | | | | in favorable sites with abundant wind resources and |
| power sources of today and the promising | | | | tax incentives. |
| technologies of tomorrow. Although both wind and | | | | Solar PV still has a way to go, with current costs of |
| solar PV have been commercially available for | | | | PV-generated power approximately five times those |
| decades, these technologies have matured over the | | | | of electricity from a natural gas plant. As a result, |
| last thirty years due to ongoing research and | | | | wind and solar must rely upon robust and stable |
| accumulated know-how. They are now experiencing | | | | government supports to fuel industry growth. But |
| rapid market growth. | | | | renewable power policies can be just as intermittent |
| The big winner so far is wind. Global wind power | | | | as the wind and sun themselves. |
| capacity has tripled since 2000 and reached nearly 75 | | | | Although recent events have spurred strong support |
| gigawatts (GW) by the end of 2006. This is still | | | | for incentives and renewable power targets, declining |
| small-less than two percent of total world | | | | fossil fuel prices could make such policies less tenable. |
| capacity-but it is enough to meet the annual electric | | | | Especially important is what happens to natural gas |
| needs of nearly 20 million U.S. households. | | | | prices and whether and when a price is put on |
| Germany, the United States, Spain, India and | | | | carbon emissions from fossil fuel-fired power plants. |
| Denmark have the largest installed wind base, but in | | | | When considering the future prospects for |
| 2006, North America saw the fastest growth. In the | | | | renewables, perspective is important. Despite their |
| U.S., nearly 3 GW of new wind turbines were installed | | | | recent rapid growth, wind and solar together account |
| last year, with overall wind capacity breaking 10 GW | | | | for just two percent of global power generation |
| along the way. U.S. wind growth was fueled by a | | | | capacity. Even with a continuation of the strong |
| federal tax credits and state renewable portfolio | | | | growth seen in recent years, wind and solar are likely |
| standard programs, which require utilities to purchase | | | | to account for less than five percent of global |
| a certain percentage of their power from renewable | | | | capacity a decade from now. |
| sources. | | | | Moreover, there are questions as to how renewables |
| At the same time, continuing technological advances | | | | will interface with existing technologies and |
| are being made in the design and operations of | | | | infrastructure. |
| windmills. | | | | But by the middle of the next decade, as wind and |
| Asia is emerging as a center of growth for both wind | | | | solar PV continue to grow-and as concentrated solar |
| energy use and wind turbine manufacturing capacity. | | | | power, advanced biomass and geothermal |
| Over 3 GW of new capacity was installed in Asia in | | | | technologies become increasingly |
| 2006, the bulk in China and India. This came as a | | | | competitive-renewables can begin to make a more |
| result of policies supporting renewables, such as | | | | significant impact in global power markets. Indeed, it |
| China's new Renewable Energy Law, which requires 5 | | | | is likely that renewable power will continue to grow |
| percent of China's electric capacity to be | | | | at a rapid rate, given the prospect for continued |
| renewables-based by 2010. India is the world's | | | | technology improvements and the likelihood that |
| fourth-largest wind power market, thanks to | | | | climate change and energy security will remain |
| sustained government support for the sector. | | | | important concerns. |