Clean-Energy Trends 2007
Maybe it was the changing global climate, or perhaps the changing business climate, that
fueled clean-energy markets in 2006. More than likely, it was both of these, among several
other factors, that pushed markets for solar, wind, fuel cells, biofuels, and other energy
technologies along their inexorable upward march.
We have reached the point where the steady and rapid growth of clean energy has become
an old story. Each year, it seems, brings an ever-higher plateau of success. This appears
to be the future of clean energy: a rolling series of technology breakthroughs, landmark
corporate investments, industry consolidation, and the not-infrequent emergence of new
and sometimes surprising players entering the field.
Since the publication of our first Clean Energy Trends report in 2002, we’ve provided an
annual snapshot of both the global and U.S. clean-energy sectors. In this, our sixth edition,
we find markets for our four benchmark technologies — solar photovoltaics, wind power,
biofuels, and fuel cells — continuing their healthy climb. Annual revenue for these four
technologies ramped up nearly 39% in one year — from $40 billion in 2005 to $55 billion in
2006. We forecast that they will continue on this trajectory to become a $226 billion market
A number of developments put clean energy definitively on the map over the past year.
These include a near tripling in venture investments in energy technologies in the U.S. to more
than $2.4 billion; a new level of commitment by U.S. politicians at the regional, state, and
federal levels; and significant corporate investments in cleanenergy acquisitions and expansion
initiatives. One indicator: There are now a half-dozen stock indexes tracking the clean-energy sector in North America, including WilderHill’s
ECO, Ardour Capital’s AGINA, and Clean Edge’s own CELS and CLEN indexes. Clean-energy
investing has now become accessible to the mainstream.
Two thousand and six also marked the year that even the most ardent naysayers about global
climate change began to change their tune — and scientists, investors, business leaders, and
politicians moved the conversation from whether climate change was occurring to what
we are going to do about it. That acceptance of climate change as “real” helped to unlock
latent interest in clean-energy technologies on the part of corporate and political leaders.
In Washington and other capitals, clean energy is now a bipartisan issue. In corporate
boardrooms, it is fast becoming an imperative.
As we highlight in our forthcoming book, The Clean-Tech Revolution, co-authored by
Clean Edge’s Ron Pernick and Clint Wilder (to be published by Collins in June 2007),
six key forces are rapidly reshaping the global energy landscape. We refer to them as
the “Six Cs”: Cost, Capital, Competition, Consumers, China, and Climate.
These potent forces have moved clean energy from the fringes to the mainstream,
and created dynamic new markets in some regions. Combined, they are accelerating
the growth of technologies, companies, and markets faster than even many optimists
might have imagined. At last, clean energy is having its day in the sun.
According to Clean Edge research:
- global markets for biofuels (global manufacturing and wholesale pricing of
ethanol and biodiesel) reached $20.5 billion in 2006 and are projected to grow
to $80.9 billion by 2016;
- wind power (new installation capital costs) is projected to expand from $17.9
billion in 2006 to $60.8 billion in 2016;
- solar photovoltaics (including modules, system components, and installation)
will grow from a $15.6 billion industry in 2006 to $69.3 billion by 2016;
- the fuel cell and distributed hydrogen market will grow from a $1.4 billion
industry (primarily for research contracts and demonstration and test units)
to $15.6 billion over the next decade.
Together, we project these four clean-energy technologies, which totaled $39.9 billion
in 2005 and expanded 39 percent to $55.4 billion in 2006, to quadruple to more than
$226.5 billion within a decade.
Venture Capital Investments
U.S.-based venture capital investments in energy technologies nearly tripled from $917
million in 2005 to $2.4 billion in 2006. As a percent of total VC investments, energy
tech increased from 4.2 percent in 2005 to 9.4 percent in 2006. Over the last seven
years, venture investments in energy technologies have increased from less than 1
percent of total venture investments to nearly 10 percent.