Clean Edge: Clean Energy Trends 2012

Report Title:   Clean Energy Trends 2012

Report Author: Clean Edge

Publish Date: March, 2012

Link to Report

Report Summary:

This year’s report is the 11^th annual edition in Clean Edge’s Clean Energy Trendsreport series. From tracking, forecasting, and market sizing the global solar, wind, and biofuels markets, to detailed analysis of solar PV pricing, the public markets, and venture capital investments, this report series has become the signature report in the clean-energy economy. This year’s report also outlines five key trends that will impact clean-energy markets in the coming years:

1. The Few, The Proud, The Green: Military Leads Clean-Energy Deployment
2. Japan Moves Toward Cleaner Post-Nuclear Future
3. Deep Commercial Building Retrofits Reap Major Efficiency Savings
4. Waste-to-Resource Breakthroughs Attract Attention – and Investment
5. New Energy Storage Solutions Embolden the Grid

Clean 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:

• The oil, gas, and coal industries still receive massive subsidies
• Venture capital is a risky, high-reward business critical to U.S. innovation
• Nuclear power projects require considerably more in loan guarantees than renewables
• 2011 marked a number of developments that point to the significant scale up of clean tech

According to our research:

• 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. However, this increase was mostly due to an increase in ethanol and biodiesel prices. The continuing trend of rising biofuel prices, up 10 to 20 percent in 2011, is the result of higher costs for feedstock commodities – mainly sugar for ethanol and rapeseed and other vegetable oils for biodiesel. Between 2010 and 2011, global biofuels sales remained relatively flat, expanding from 27.2 billion gallons to 27.9 billion gallons of ethanol and biodiesel production worldwide.
• 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.
• 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.

Together, we project these three benchmark technologies, which totaled $188.1 billion in 2010 and grew 31 percent to $246.1 billion in 2011, to grow to $385.8 billion over the next decade.

U.S. Clean-Tech Venture Investments

In 2011, U.S.-based venture capital investments in clean technologies increased from $5.1 billion in 2010 to $6.6 billion in 2011, an increase of 30 percent, marking a near-record year according to data provided by the Cleantech Group.

Last year’s $6.6 billion, while slightly below 2008’s record-breaking $6.9 billion total, represented clean tech’s largest percentage of VC activity in the U.S. ever recorded, clocking in at 23.1 percent. At nearly a quarter of total VC activity in the U.S., the clean-tech sector has expanded more rapidly than any other venture category, up from just 1.2 percent of total venture activity a decade earlier.