As the clean energy industry emerges from a challenging period caused
by the global economic downturn, it is entering a stage of rapid
change in which business models are being transformed against a
backdrop of regulatory uncertainty. In several key sectors, the market
is shifting back toward business structures and technologies that were
once abandoned, but are now being revived. A new white paper from Pike Research
identifies 10 key trends that are part of this transformation. The
paper, which includes commentary and predictions about the state of the
clean energy industry in 2011 and beyond, is available for free
download on Pike Research’s website. [See Predictions for Cleantech in 2011]
“As the clean energy industry matures and as it simultaneously comes
to grips with economic challenges, market leaders are experimenting
with new business models, both at a large scale and on a distributed
basis,” says senior analyst Peter Asmus. “At the same time, key
industry players are utilizing an increasingly wider diversity of technology options, especially in the solar and wind sectors.”
1. Wind power steps up efforts to move offshore.
Citing concerns, population density, limited available onshore sites,
and concerns about wind power’s impact on birds and bats have often
delayed and hindered many wind power projects. So, some developers,
manufactures, governments, and investors, particularly in the United
States and The United Kingdom have opted to move their wind power
projects offshore, in spite of the potential additional costs
associated with building long distance transmission lines. The biggest
players in this market are Germany, the United Kingdom and Denmark,
which obtains more than 25% of its electricity from wind power.
However, in the long-term, Pike Research’s market forecast shows that
China’s offshore wind market will be even with the UK and Germany by
2. Wave and tidal energy are about to take off. There
is a growing interest lately in hydrokinetic technologies such as
those that make use of wave and tidal motion, and it is expected that
within the next five to eight years, these emerging technologies will
become commercialized to the point that they will begin competing for a
share of the growing renewable energy market. There is growing
interest in these technologies in the United States, Ireland, South
Korea, Australia, New Zealand, Japan, and Portugal. The market is
driven primarily by about 100 firms, however there a number of larger
players including Lockheed Martin, Pacific Gas & Electric, Chevron,
BP, and Shell are looking to deploy wave and ocean current devices. In
the States, Maine leads on tidal, and Oregon leads in terms of wave
power deployment. [See A Stacked Overtopping Wave Energy Machine … Pretty Cool]
3. DC-based microgrids may transform clean energy markets. The growing interest in DC-based microgrids stems from the following developments:
- Advances in power electronics originating from electric drives,
process plants, and mass transit traction systems have been adapted to
the transmission and distribution (T&D) industry.
- Some of the same kinds of power electronics innovations occurring
with PCs, iPods, and other consumer gadgets have occurred within larger
- AC transmission systems suffer lines losses that can range from 10% to 15%, while HVDC line losses lose just 2%.
- AC systems sometimes flow in unpredictable ways, which contributes
to rolling blackouts or brownouts, while HVDC systems are 100%
controllable, with the power only going where you want it to go.
Ironically, today’s utility grid evolved to an AC-based grid because
the technology could carry power better over long distances than
low-voltage DC and the electric utility industry evolved into a
monopoly-based business model. Both giant IT firms and emerging
entrepreneurs are supporting the idea of switching back to direct
current T&D systems. DC systems are already in the home– being
used to power PCs, thermostats, refrigerators, gas meters, AC outdoor
united, washing machines, and gas ranges, etc.
4. More utilities are underwriting new renewable energy power plants and cogeneration facilities.
After decades of reliance on independent power producers as the primary
developers of new renewable energy power plants and cogeneration
facilities, in the wake of the recent Wall Street meltdown and resulting
recession, new capital intensive projects are now relying more on
utilities to underwrite these ventures. U.S. utility firms are dominating
in this arena, with investor-owned utilities financing an increasing
share of large systems that feed directly into utility wholesale grids.
While most of the action is taking place in California, these are a
number of utility-owned generation (UOG) systems and utility-scale solar
PV projects being developed in Colorado, Nevada, and Arizona.
5. Offshore wind power is seeking new sources of financing.
Offshore wind power in Europe is financed by an umbrella of companies,
which almost always include a government-owned financial institution, as
well as unregulated arms of large utilities. As these wind projects
move into the mainstream, it has become necessary for utilities to
identify new sources of financing to remain sustainable. In the United
States, where the off-shore wind market is drive by wind developers,
those with ties to major utilities are in the best position to get
through current economic setbacks.
6. Geothermal is making a comeback in the United States.
Western state renewable portfolio standards (RPS) laws are driving
investment in new transmission. In U.S. western states, geothermal power
generation is seeing a period of tremendous growth, with California
and Nevada being the strongest markets. There are 188 geothermal
projects in 15 states being developed. Pike Research forecasts the the
U.S. will add 2,313 MW of geothermal capacity by 2015.
7. There is significant diversification in the solar sector.
There is movement away from a focus primarily on polysilicon solar PV
to an embracing of other solar technologies including thin film solar PV
panels, concentrated solar power (CSP) also known as solar thermal
electric, and concentrated solar PV (CPV). [See Is the Concentrated Photovoltaic Sector Heating Up?]
One of the most interesting developments in solar is the merging of CSP
and solar PV concepts- known as concentrating solar PV. It achieves
efficiencies than 40% while solar PV panels are only 20% efficient. The
size of solar power generators is growing. The bundling of tax
incentives and attractive leasing arrangements have enabled customers
to install solar PV on large commercial complexes without and major
up-front capital costs. Wind is not the only renewable energy to take
to the water. A handful of firms are driving a new trend of floating
solar arrays. In the United States, SPG Solar in Novato, CA has
installed two projects on ponds for California wineries.
8. Wind power is undergoing diversification in both design and scale.
Solar is not the only clean energy sector that is experiencing a period
of diversification. Wind is undergoing diversification in both design
and scale. While most commercial wind turbines are based on the classic
Danish three-bladed upwind design, two-bladed designs are being
promoted due to capital cost savings, and vertical axis designs are
being used for offshore wind power generation and for the small-scale
wind market. Because the cost to install as smaller wind turbine dose
not difference significantly that the cost to install a larger wind
turbine, there has be a push for larger machines.
9. On the verge of a comeback in the United States, the
nuclear power industry faces the possibility of dying out as a result of
the nuclear disaster in Japan. [See The Nuclear Power Resurgence] After
hitting an all time high in acceptance by the public, the evolving
calamity at the Fukushima nuclear power plant witnessed by the world as
it happens is having a significant negative impact on perceptions of
nuclear power around the world, that could ultimately doom the
industry. [See Japan’s Once-Powerful Nuclear Industry is Under Siege]
With the exception of the United States, most nations around the world
are cancelling plans for expanding the use of nuclear power and some,
most notably, Germany is planning on phasing out the use of nuclear
power. For the most part the rest of the world is shifting the focus
away from nuclear energy and to renewable energy.
Pike Research analysts suggest that in the United States, the
politicization of renewable energy, and the nuclear power industry’s
strategy of being linked it as a clean source of energy, may also serve
to force President Obama
to renege on his commitment to set aside $36 billion of federal tax
payer money into loan guarantees designed to revive the nuclear
industry. They suggest that the Tea Party movement in the Republican
party will see the support of nuclear as socialist. While it is an
interesting theory, the Tea Party has not been up in arms over the
subsidizing of the oil, gas, and coal industries, and Republicans have
for the most part supported the nuclear industry in the past. However,
even before the earth quake in Japan, utilities in the U.S. were
expressing misgivings about nuclear power as a viable energy source
because of the capital risks, sting concerns, and low natural gas
10. China’s wind market is facing continued growing pains. Even
though China is the largest wind power market in the world, it is
facing several significant setbacks. The products of some of the
nation’s smaller developers from have experienced some quality control
issues and this has force the Chine to impose new quality standards to
weed them out. They have been unable to generated the revenues that
they anticipated due to increased competition from European
manufacturers that have entered the market and the requirement that 70%
of all components be manufactured by its domestic supply chain. China’s
growth in wind power is slowing because it’s feed-in tariffs and
mandatory grid access have not been enforced. Additionally, developers
are having difficulties financing projects, as well as facing cash flow
issues because if the policy of paying subsidies every six months, while in other countries subsidies are paid out on monthly basis.
Conclusions and predictions presented in Pike Research’s white paper, “Clean Energy: Trends to Watch in 2011 and Beyond,”
draws from a broad array of Pike Research reports, with market
forecasts included for key sectors. A full copy of the white paper is
available for free download on the firm’s website.