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CLEAN-ENERGY TRENDS 2006
Clean Edge
March 2006
http://www.cleanedge.com/reports-trends2006.php
The following is an excerpt from Clean-Energy Trends 2006. The
complete
report can be downloaded here:
http://www.cleanedge.com/reports/index.php?report=trends2006
............
At long last, the tipping point is nigh: For the first time in
modern
history, clean-energy technologies are becoming cost-competitive
with their
"dirtier" counterparts. While oil and natural gas prices remain
stubbornly
high and frustratingly volatile across the globe, and as nuclear
and
coal-based energy remain dogged by environmental and safety
concerns,
clean-energy prices continue their near-relentless downward
march.
Consider wind power. In certain regions, it is now one of the
least
expensive and most easily deployed sources of new generating
capacity. Or
ethanol, which has gained favor for vehicle use in both in the
U.S. and
abroad. Or biodiesel, made from a wide range of animal and
vegetable oils,
whose price is within striking distance of petroleum-based
diesel. Even
solar, still relatively expensive without subsidies, competes
favorably in
some places and is often the cheapest choice for power in remote
regions.
Suddenly, so-called "alternative" energy technologies are
looking pretty
mainstream.
The growth of clean-energy markets reflects its growing
acceptance. Global
wind and solar markets reached $11.8 billion and $11.2 billion
in 2005 -- up
47% and 55%, respectively, from a year earlier. The market for
biofuels hit
$15.7 billion globally in 2005, up more than 15% from the
previous year.
Multinationals like Archer Daniels Midland, BP, GE, Sharp, and
Toyota are
partly responsible for stoking these technologies' aggressive
growth,
leading the way with billion-dollar divisions dedicated to
solar, wind
power, ethanol, and hybrid electric vehicles, among other
technologies.
State and city governments throughout the U.S. are playing a key
role, too,
competing feverishly to become clean-energy hubs that attract
economic
development and jobs. The Silicon Valley venture firms that
financed the
Internet and wireless telecom revolutions -- among them Draper
Fisher
Jurvetson; Kleiner Perkins Caulfield & Byers; Mohr, Davidow
Ventures; and
VantagePoint Venture Partners -- have begun placing increasingly
bigger bets
on clean-energy.
Even America's Oilman, George W. Bush, seems to be warming to
clean energy.
In his 2006 State of the Union address, he declared what pretty
much every
other American already knew: the U.S. is "addicted to oil." Not
an
inconsequential statement for a Texan whose vice president once
dismissed
energy conservation as merely a "personal virtue." Bush proposed
an
initiative that calls for a 22% increase in clean-energy
research and a goal
of replacing at least 75% of U.S. Middle East oil imports by
2025 (though he
offered no substantive funding to do these things).
Even without federal intervention, global clean-energy markets
will
flourish. According to Clean Edge research, biofuels (global
manufacturing
and wholesale pricing of ethanol and biodiesel) will grow from
$15.7 billion
in 2005 to $52.5 billion by 2015. Wind power (new installation
capital
costs) will expand from $11.8 billion in 2005 to $48.5 billion
in 2015.
Solar photovoltaics (including modules, system components, and
installation)
will grow from an $11.2 billion industry in 2005 to $51.1
billion by 2015.
And the fuel cell and distributed hydrogen market will grow from
$1.2
billion (primarily for research contracts and demonstration and
test units)
last year to $15.1 billion by 2015.
In total, we project these four clean-energy technologies, which
equaled $40
billion in 2005, to grow fourfold to $167 billion within the
coming decade.
It's not all smooth sailing, however: There remains turbulence
in the
clean-energy sector. The solar industry is experiencing growing
problems,
unable to gain access to enough silicon feedstock to keep pace
with demand.
It will continue to put pressure on upward pricing over the
short term.
Biofuels, while showing great promise, face obstacles, not the
least of
which is how to quickly ramp up widespread distribution
channels. Growth of
wind turbines, while currently expanding rapidly, could flag as
well as
short-term price increases due to high steel costs and shifting
currency
valuations. And mass adoption of fuel cells and hydrogen remain
decades
away.
We believe many such obstacles are surmountable through a
combination of
incremental and breakthrough technology developments, the
continued scale-up
of manufacturing, and smart investments by corporations,
investors, and
governments. As we've seen over the last five years since
issuing our first
report on clean technologies (Clean-Tech: Profits and Potential,
April
2001), the market has considerable momentum and represents one
of the
fastest-growing technology sectors on the planet.
Solar Shines for Investors
It could be said that 2005 was the Year of the Sun. On both the
private and
public markets, solar outshined other energy technologies. VCs
put more than
$150 million into U.S.-based companies such as Advent Solar,
Energy
Innovations, Heliovolt, MiasolŽ, Nanosolar, and PowerLight in
2005 -- double
the investments in 2004.
Solar's glow was even more evident in the public markets. The
three largest
technology IPOs of 2005 were for solar companies: Q-Cells,
SunPower, and
Suntech Power. Combined, they raised more than $800 million (on
the
Frankfurt, NASDAQ, and NYSE exchanges, respectively), and by the
end of
their first trading day, each had market capitalizations
exceeding $1.5
billion.
Clean-tech stocks in general are doing well. A number of
clean-energy
stalwarts are trading at or near their 52-week highs. At the
time of
publication, Energy Conversion Devices (ENER), Evergreen Solar
(ESLR), Itron
(ITRI), and Spire Corp. (SPIR) were all trading at roughly
double their
year-ago levels. But stock prices for other clean technologies,
including
fuel cells and microturbines, showed less energy.
U.S.-based venture capital investments in energy technologies
increased from
$716 million in 2004 to $917 million in 2005. As a percent of
total VC
investments, energy tech increased from 3.3 percent in 2004 to
4.2 percent
in 2005. Over the last six years, venture investments have more
than
quadrupled as a percent of total VC investments, increasing from
under 1
percent of total venture investments in 1999 to last year's 4.2
percent.
Clean Energy State of Mind
In the United States, clean energy has become a politically
unifying issue
with wide support from those of every political stripe, from
traditional
liberals to current and former military brass. This
bipartisanship has been
particularly evident at the state level, where nearly twenty
states now have
renewable portfolio standards (RPS) that mandate a percentage
(often up to
20-25 percent) of electricity coming from clean energy. States
like
California, Hawaii, New York, and Pennsylvania are embarking on
aggressive
-- and impressive -- clean-energy programs.
It's a trend we expect to continue as states view clean energy
as an
opportunity to address air pollution, public health problems,
greenhouse
gases, and grid congestion -- and a way for states to become
known as
centers for clean-technology development, with all the new jobs
and
businesses that can result.
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Published by David Sunfellow
NewHeavenNewEarth (NHNE)
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