Has the Clean Energy Boom Gone Bust?

Well, the vultures might be circling, but they might have to wait a while to pick the bones of  the cleantech industry, which by many accounts, is still far from dead.

Juliet Ellperin wrote in this month’s Wired, that the CleanTech boom has gone bust, comparing it to both the Internet bubble and the housing bubble.

She cites the fact that in the US some $44 billion was invested in the sector between 2009 and 2011, and then holds up the Solyndra story, as if to suggest that this somehow proves that all that money was wasted. But Solyndra was a unique case, with a very specialized silicon-free cylindrical collector technology whose success was predicated on the assumption that silicon flat panel prices would remain high. When the heavily subsidized Chinese came out with a flood of low-cost silicon flat panels that drove prices down by 17 percent, it was checkmate for Solyndra. They had no place to turn.

American solar manufacturers are being heavily out-subsidized by their Chinese counterparts, which has led to several bankruptcies, and may yet lead to some more among the smaller players. And yet, the fact is, the US had a $1.9 billion trade surplus in solar technology with close to a quarter of that going to China, with big players like First Solar and SunPower leading the way.

The other reason for the bust, says Ellperin, is that fossil fuel prices, especially natural gas, are not increasing as quickly as expected.

“Because natural gas has gotten so cheap, there is no longer a financial incentive to go with renewables. Technical advances in natural gas extraction from shale—including the controversial practice of hydraulic fracturing, or fracking—have opened up reserves so massive that the US has surpassed Russia as the world’s largest natural gas supplier.”

But fracking is still far from a slam dunk, with many states opposing it, and for several good reasons including water pollution, air pollution, and now earthquakes.

A number of experts are forecasting significant growth for the renewable sector despite these mitigating factors.

Bloomberg New Energy Finance projects renewables to grow by 800 percent by 2030 to 2.5 TW. They “expect approximately 1.1TW of new build this decade, with 36 percent from solar and 46 percent onshore wind, followed by 1.4TW between 2021 and 2030, of which half will be new solar installations and 37 percent onshore wind.”

Investment worldwide will roughly double from $195 billion in 2010 to $395 billion in 2020, rising further to $460 billion in 2030. All told, this represents roughly $7 trillion invested. Total share of renewables will rise from 12.6 percent to 15.7 percent of the rapidly growing demand.

India, which saw 52% renewable  growth to $10.3 billion, is a particularly bright example showing how quickly this technology can take off, especially under the right conditions. Most of the new capacity went up as utility scale project with both solar and wind taking significant shares. The Indian government has set a goal of 20GW of solar by 2020.

In the US, the solar market is expected to grow by a factor of four from $1.2 billion today to $4.7 billion by 2016. Its share of the total energy supply will grow from 1 percent to 3 percent during that timeframe. New financing programs, like solar purchase power agreements (SPPA) that shift the risks and the upfront costs away from the consumer, and the growth of the smart grid, are largely responsible for driving this growth.

Wind power grew in 2010 to by 39.4 GW to a worldwide total of 200 GW. A 25 percent increase in the number of installations, though installed capacity only grew by 3 percent, down considerably from the 27.4 percent growth rate of the previous five years. Much of this decline occurred in the US, the world’s number two wind market, where installation rates dropped nearly 50 percent. Reflecting the financial crisis, the decline was mostly in Europe and the Americas, while Asia experienced strong growth.

Following this brief pause, BTM Consult predicts a growth rate of 15.5 percent through 2015, flattening slightly to 11.5 percent from 2016-2020. The result will be a tripling of capacity by that time.

All told, these kinds of numbers hardly have the look of an industry that has gone bust.

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{Image credit: NTU - Brackenhurst: Flickr Creative Commons]

RP Siegel, PE, is the President of Rain Mountain LLC. He is also the co-author of the eco-thriller Vapor Trails, the first in a series covering the human side of various sustainability issues including energy, food, and water. Now available on Kindle.

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