Renewable Electric Power Takes Off

Renewable electric power is beginning to soar. TheSolar PV is hot, too. It works by converting sunlight
current surge of activity, which has been acceleratingdirectly 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 renewablegrown 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 securitythe 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 more6 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 areSolar 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 sociopoliticalworld'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 decadesThe surge in wind and solar PV over the last several
and $30 billion of research funded by the Unitedyears is creating its own obstacles. The wind industry
States and other industrial countries have gone intois currently struggling with turbine component
renewables, along with billions more from the privateshortages. These shortages have driven up the
sector. The effort has been marked byinstalled 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 aftertoday-if you can find them.
languishing for many years on the fringe, renewablePolysilicon demand from PV manufacturers is now
power is now headed into the mainstream.greater than demand from the semiconductor
Renewable power technologies generate electricitybusiness, 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 powersources of demand.
technologies include hydro, geothermal and biomass.This has created a shortage and driven up prices.
Familiar to most people, hydro power involves thePolysilicon prices exceeded $100 per kilogram in 2006,
use of dams and running water to drive electricup 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 innew wind turbine component and silicon
geologic reservoirs to generate electricity. Biomassmanufacturing capacity comes on line. In the
plants burn forest products and agricultural residuesmeantime, technologists are seeking to find ingenious
to produce steam to accomplish the same. Theseways to innovate around these shortages.
traditional renewable power technologies account forThe rapid growth in renewable power has been
more than 90 percent of global renewable poweraccompanied 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 exoticclean energy reached $70 billion in 2006, up from $50
technologies. Concentrated solar power plants usebillion in 2005. Venture capitalists are now focusing on
mirrors to focus sunlight and boil a fluid to producethis sector as well. According to the Cleantech
steam to drive a turbine. Enhanced geothermalVenture Network, the North American venture capital
systems produce electricity with steam made fromcommunity invested $758 million in wind and solar
water that is injected into the earth and heated bystartups in 2006, a threefold increase from 2005.
contact with hot rocks. Biomass gasification plantsPolicy uncertainty and fossil fuel prices are among the
turn biomass into a gas that can be used in abiggest threats to renewable power in the short and
combined-cycle generator. These technologies havemedium 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 occupyalthough some wind projects are competitive today
the middle ground between the traditional renewablein favorable sites with abundant wind resources and
power sources of today and the promisingtax incentives.
technologies of tomorrow. Although both wind andSolar PV still has a way to go, with current costs of
solar PV have been commercially available forPV-generated power approximately five times those
decades, these technologies have matured over theof electricity from a natural gas plant. As a result,
last thirty years due to ongoing research andwind and solar must rely upon robust and stable
accumulated know-how. They are now experiencinggovernment 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 poweras the wind and sun themselves.
capacity has tripled since 2000 and reached nearly 75Although recent events have spurred strong support
gigawatts (GW) by the end of 2006. This is stillfor incentives and renewable power targets, declining
small-less than two percent of total worldfossil fuel prices could make such policies less tenable.
capacity-but it is enough to meet the annual electricEspecially 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 andcarbon emissions from fossil fuel-fired power plants.
Denmark have the largest installed wind base, but inWhen considering the future prospects for
2006, North America saw the fastest growth. In therenewables, perspective is important. Despite their
U.S., nearly 3 GW of new wind turbines were installedrecent rapid growth, wind and solar together account
last year, with overall wind capacity breaking 10 GWfor just two percent of global power generation
along the way. U.S. wind growth was fueled by acapacity. Even with a continuation of the strong
federal tax credits and state renewable portfoliogrowth seen in recent years, wind and solar are likely
standard programs, which require utilities to purchaseto account for less than five percent of global
a certain percentage of their power from renewablecapacity a decade from now.
sources.Moreover, there are questions as to how renewables
At the same time, continuing technological advanceswill interface with existing technologies and
are being made in the design and operations ofinfrastructure.
windmills.But by the middle of the next decade, as wind and
Asia is emerging as a center of growth for both windsolar 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 intechnologies become increasingly
2006, the bulk in China and India. This came as acompetitive-renewables can begin to make a more
result of policies supporting renewables, such assignificant impact in global power markets. Indeed, it
China's new Renewable Energy Law, which requires 5is likely that renewable power will continue to grow
percent of China's electric capacity to beat a rapid rate, given the prospect for continued
renewables-based by 2010. India is the world'stechnology improvements and the likelihood that
fourth-largest wind power market, thanks toclimate change and energy security will remain
sustained government support for the sector.important concerns.