Renewables 2007: Perceptions and Realities  

Renewable Energy World has a report on investment trends in renewable energy last year from Eric Martinot at WorldWatch.

In 2007, more than $100 billion was invested in new renewable energy capacity, manufacturing plants, and research and development -- a true global milestone. Yet perceptions lag behind the reality of renewable energy because change has been so rapid in recent years. This report captures that reality and provides an overview of the status of renewable energy worldwide in 2007. The report covers trends in markets, investments, industries, policies, and rural (off-grid) renewable energy. (By design, the report does not provide analysis, discuss current issues, or forecast the future.) Many of the trends reflect increasing significance relative to conventional energy.

* Renewable electricity generation capacity reached an estimated 240 gigawatts (GW) worldwide in 2007, an increase of 50 percent over 2004. Renewables represent 5 percent of global power capacity and 3.4 percent of global power generation. (Figures exclude large hydropower, which itself was 15 percent of global power generation.)

* Renewable energy generated as much electric power worldwide in 2006 as one-quarter of the world's nuclear power plants, not counting large hydropower. (And more than nuclear counting large hydropower.)

* The largest component of renewables generation capacity is wind power, which grew by 28 percent worldwide in 2007 to reach an estimated 95 GW. Annual capacity additions increased even more: 40 percent higher in 2007 compared to 2006.

* The fastest growing energy technology in the world is grid-connected solar photovoltaics (PV), with 50 percent annual increases in cumulative installed capacity in both 2006 and 2007, to an estimated 7.7 GW. This translates into 1.5 million homes with rooftop solar PV feeding into the grid worldwide.

* Rooftop solar heat collectors provide hot water to nearly 50 million households worldwide, and space heating to a growing number of homes. Existing solar hot water/heating capacity increased by 19 percent in 2006 to reach 105 gigawatts-thermal (GWth) globally.

* Biomass and geothermal energy are commonly employed for both power and heating, with recent increases in a number of countries, including uses for district heating. More than 2 million groundsource heat pumps are used in 30 countries for building heating and cooling.

* Production of biofuels (ethanol and biodiesel) exceeded an estimated 53 billion liters in 2007, up 43 percent from 2005. Ethanol production in 2007 represented about 4 percent of the 1,300 billion liters of gasoline consumed globally. Annual biodiesel production increased by more than 50 percent in 2006.

* Renewable energy, especially small hydropower, biomass, and solar PV, provides electricity, heat, motive power, and water pumping for tens of millions of people in rural areas of developing countries, serving agriculture, small industry, homes, schools, and community needs. Twenty-five million households cook and light their homes with biogas, and 2.5 million households use solar lighting systems.

* Developing countries as a group have more than 40 percent of existing renewable power capacity, more than 70 percent of existing solar hot water capacity, and 45 percent of biofuels production.

Including all these markets, an estimated $71 billion was invested in new renewable power and heating capacity worldwide in 2007 (excluding large hydropower), of which 47 percent was for wind power and 30 percent was for solar PV. Investment in large hydropower was an additional $15-20 billion. Investment flows became more diversified and mainstreamed during 2006/2007, including those from major commercial and investment banks, venture capital and private equity investors, multilateral and bilateral development organizations, and smaller local financiers.

"Community energy" projects are generally defined as those between one and 20 megawatts (MW). This is a sector that is often overlooked -- small-scale renewables like solar photovoltaics, and large-scale renewables like wind, geothermal, and concentrating solar power, receive far more attention. The advantage of community energy projects is that communities can develop these projects themselves, using local funding if available, and add significant amounts of renewable energy to their local grid without waiting for outside developers.

There are many ways businesses and local governments can build community energy projects.

First, most states now have "net metering," which allows utility customers to build a renewable energy system to meet up to 100% of their electricity needs and receive credit, on an annual basis, for any excess power produced. For example, if a solar system is installed that produces too much power for the customer in the summer, but not enough power in the winter, the utility will credit the excess produced in the summer back to the customer, allowing for the system to cover up to 100% of the customer's electricity needs on an annual basis. California's net-metering law only allows systems up to one megawatt, however. New Jersey allows up to two megawatts.

The major problem with net metering is that a customer can't make money be selling excess electricity to the grid, so it's not an incentive to build large amounts of new renewables.

One solution for this problem is a "feed-in tariff," which does allow a customer to make money for excess power produced. Under California's just-approved AB 1969 feed-in tariff system, customers can building renewable energy systems up to 1.5 MW and can sell up to 100% of the power produced to the utilities for a set price. The utilities have to accept the power at the set price. However, the total new capacity under this feed-in tariff is capped at 478 MW state-wide. Similarly, Washington State has a feed-in tariff for solar systems, which pays customers varying amounts, depending on whether they buy components made in Washington State. However, the system is still not up and running due to delays in the regulatory process.

The feed-in tariff is a great way for local governments and businesses to offset their own emissions by achieving up to 100% renewable energy, while paying less than other methods would cost. It's also possible to make money by selling power to the grid in some situations under the feed-in tariff.