(by Ron Pernick) -The American Council on Renewable Energy (ACORE) likes to say that
we are in Phase II of renewable energy development. In this
worldview, the past 30 years were about developing core clean-energy
technologies, and the next couple of decades will be about focusing
the nation’s efforts on putting (as ACORE says on its web
site) “these new technologies to use in our society, with benefits
for energy supply, national security, economic growth, investment,
jobs, a cleaner environment, reduced risk of climate change, and
improved health.”



I couldn’t agree more. We are moving into the next stage of clean-
energy technical, financial, and policy development. And I believe
it will be all about scaling up.



Clean energy is moving so far beyond the “alternative” moniker that
many regions and states are now targeting 20 percent or more of
their energy from clean-energy sources within the next decade or
two – representing more electricity generating capacity than natural
gas in many regions. Even China is targeting significant amounts of
renewable energy. China’s Renewable Energy Law is targeting 120 GW
of new renewable by 2015 (representing three times the amount of
nuclear power currently on the drawing boards).



So, will clean energy technologies like solar, wind, and biofuels
and its efficiency brethren like green buildings, light emitting
diodes (LEDs), and the smart grid be the dominant form of global
energy generation (and conservation) by 2020? Perhaps not. But will
they represent the highest growth and innovation opportunity in the
energy sector and double-digit chunks of our energy infrastructure?
Absolutely!



Just look at the numbers to put this “scale up” in perspective. Back
in 2003 the solar industry was valued at less than U.S. $5 billion
globally with around 600 MW of solar manufactured worldwide. By 2006 
that number had approached U.S. $16 billion with more than 2 GW of
solar manufactured globally. Now, companies like German-based
SolarWorld are announcing plans for 500 MW solar manufacturing
facilities (in the U.S. nonetheless) – nearly equal in size to the
total global manufacturing output (among all manufacturers) just
five years ago.



Wind power, which in 2003 represented just 8000 MW worldwide of new
installed generation capacity, nearly doubled to more than 15,000 MW
in 2006. Just last month T. Boones Pickens announced plans for a
4000 MW wind power plant – that’s equal to the total annual global
install less than a decade ago. FPL recently announced that it will
develop 10,000 MW of new wind power projects between now and 2012.
What will this inevitable scale-up mean to the industry? Well, we’re
certain to see increased M&A activity as multinationals with clean-
energy interests like ADM, Applied Materials, FPL, GE, Honda, Sharp,
and Toyota work to maintain or build their leadership positions. And
of course, we’ll see a slew of public offerings. In just the past
year such companies as First Solar, Comverge, and Enernoc have gone
public – with many other companies waiting in the wings. And
performance for the sector hasn’t been bad. Between the beginning of
the year and the end of July the NASDAQ Clean Edge U.S. Liquid
Series index (CELS), a benchmark index designed by Clean Edge and
NASDAQ(r), was up more than 30 percent.



I firmly believe that scaling up manufacturing and driving down
costs is not a luxury for the clean-energy sector – but a necessity.
Wind, after 30 years of significant gains is now cost competitive in
most markets in the world with limited subsidies. Solar, while still
2-3 times more expensive than most of its energy competitors on a
pure cost basis, can compete economically at the retail level in
many markets when modules and systems integration are packaged with
government incentives and financing schemes. As installed solar
system pricing reaches $3.50 per peak watt in the next five year s
or so – we’ll see solar competing in most utility markets without
the need for significant subsidies.



As I look out over the next 5-10 years I’m confident that the most
important development in the clean-energy sector will be the scaling
of manufacturing, systems integration, and equally important,
technology deployment. Millions of jobs and billions of dollars will
be generated in the process if policymakers, investors,
corporations, and innovators get this right.



It won’t be easy. Many core technologies, like solar cells and wind
turbines and LEDs, will become commodities – making the business
proposition more difficult for players that don’t innovate and
capture a larger portion of the value chain. But it represents the
natural “growing up” of the clean-energy sector. And, as we move
into this next stage of clean-tech development, the economy will be
sustainably transformed in the process.



Welcome to Phase II!