[The Vector] Clean Energy Trends 2011 Report – Continued

(Continued from an earlier post…)

U.S. Venture Capital

U.S. Venture Capital investments increased in 2010, too, from $3.5 billion in 2009 to $5.1 billion in 2010 (a 45.7% increase). The number did fall short of the record-breaking $6.1 billion invested in 2008. However, more than 370 deals in 2010 represent the largest number of financings recorded in a 1 year period, says the report. Of the ten largest venture capital deals in 2010, 5 were in solar, 2 were for EVs, 2 were for bio-based materials and 1 was for geothermal.

The Issue of Cost Parity

As the authors of the reports have stated almost every year, clean energy markets will only truly thrive when they reach cost parity with “conventional” energy. In a recent study, the group analyzed current and future costs of distributed solar PV compared with US retail electricity rates, and in select markets, solar is starting to reach cost parity. The authors project that by 2015, distributed solar PV systems will be cost competitive for residential owners in at least 11 states, and by 2020, in 47 states.

Wind is already cost-competitive with fossil fuel-generated electricity, says the report, when considering time to market, sitting requirements and overall costs. At present, most new wind farms are producing electricity in the range of 5 to 8 cents per kWh range, making it one of the least expensive options. But this doesn’t mean that wind, like the fossil fuels, should require some subsidies and supportive policies.

The World Ten Years from Now

The Clean Energy Trends authors, using research and data, say they expect changes to the scenery in the next decade, including:

• Solar and Wind resources could contribute 20-30% or more of electricity generation capacity in dozens of U.S. markets and in a number of global markets (though it already does has reached that level in a few countries);
• An explosive growth in the electrification of transportation is expected in the U.S., China, Japan, Europe and other major markets, with millions of grid-connected vehicles on the roads;
• The slow death of compact fluorescent lights and the emerging dominance of LED technology are to be expected;
• More low-cost green buildings that produce more energy than they consume is expected.

Two Key Trends

In addition to the general trends and growth, the report also outlined some key trends that will impact clean energy markets in the coming years. Two of the trends are:

1) Natural Gas will advance as a powerful partner for wind and solar energy.

This trend is somewhat controversial. The move to include natural gas in clean-energy plans, included in President Obama’s call for clean energy, will most likely be integral. Natural gas is abundant in the U.S.; it burns far cleaner than coal or oil; it can successfully be paired with renewal energy; it is highly flexible and can be used in a wide range of applications; prices have fallen and may remain relatively low for an extended period. Most U.S. states don’t include natural gas in their top-tier of clean energy requirements, says the report.

As the report states, “President Obama’s expansive view of clean energy may not fit everyone’s view of a clean-tech future. But definitions aside, natural gas provides many advantages over coal and nuclear. With proper regulation and oversight, the combination of natural gas and renewable energy sources could serve as a useful bridge to a clean-energy economy.”

2) Alternatives to Rare Earth Materials & Metals.

Innovation provides alternatives to Rare Earth materials (such as lithium used in batteries and indium, gallium and tellurium used in thin-film PV solar.) Rare Earth materials are of particular concern because 95% of the world’s supply is currently in China. Many of these materials are important in green energy applications (as well as other electronic devices such as smart phones and hard drives.) The demand is high, and the supply is vulnerable to risks. The ability to innovate in this area will alleviate some future concerns.

Ron Pernick, the co-founder and managing director of Clean Edge said in a press release, “As witnessed over the past decade, clean tech has proven to be a significant business opportunity, and its growth rates now rival that of earlier technology revolutions like telephony, computers and the internet.” (BusinessWire, March 14, 2011.)