Showing posts with label slowdown. Show all posts
Showing posts with label slowdown. Show all posts

The Implications of the Expiration of US Renewable Energy Subsidies

US Renewable energy subsidies expired in 2011 and this will slow the growth of renewables. There is already evidence that the expiration of the renewable energy cash grant programme under Section 1603 of the US Internal Revenue Code will reduce the volume of new renewable energy projects.

A significant volume of Q4 2011 transactions were driven by efforts to benefit from Section 1603. As a consequence the impact of renewable energy subsidies will not be immediately felt during the first six to nine months of 2012.

In 2011, although the debt market for renewable energy financing was strong, there was evidence that lenders became even more cautious. In 2012, different capital markets solutions will need to be considered.

To improve the outlook for renewable energy Congress can support President Obama's budget proposals to end oil subsidies and make renewable energy tax credits permanent.

© 2012, Richard Matthews. All rights reserved.

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US Wind Energy Market Review and Forecasts for 2012

After decreasing by almost 50 percent in 2010 the US wind installations began to show signs of recovery in 2011. Wind farms have proliferated across the United States over the past decade, they now generate 3 percent of the nation's electricity. Wind power has installed 35 percent of all new American electric generation in the last five years. Wind energy is also one of the fastest growing new sources of US manufacturing jobs. American wind power accounts for 75,000 jobs today, and can grow to almost 100,000 jobs four years from now and according to a Bush Administration study, wind can support 500,000 American jobs less than 20 years from now. The U.S. now has over 400 manufacturing facilities in 43 states involved in wind turbine manufacturing. This represents a 12-fold growth in domestic manufacturing over the last six years.

Globally 2011 was a good year for wind installations in China, India and Canada and even Europe. Led by Brazil and Mexico, we are starting to see major growth in Latin America. The US market, although not up to the 10 GW installed in 2009, will be well ahead of 2010’s 5 GW market.

Increasing fossil fuel prices mean that as far as cost efficiency is concerned the wind power could achieve parity by 2016. The best wind farms in the world already produce power as economically as coal, gas and nuclear generators.

More than 7 GW of wind capacity is expected to be installed in the US in 2012, a 25% increase on 2011. The growth in wind is fueled by the proximate expiration of the Loan Guarantee programme, the production tax credit (PTC) and the investment tax credit (ITC), the main drivers for the wind market.

As developers of wind energy rush to complete projects before the expiration of the PTCs at the end of this year, the market will experience an acceleration of installations, especially during Q1 and Q2 of 2012. If the PTCs are not extended, a major halt throughout the entire US wind industry can be anticipated in the second half of 2012.

© 2012, Richard Matthews. All rights reserved.

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US Solar Energy Review and 2012 Forecasts

The solar sector will face some intense headwinds in 2012. Despite obstacles, the solar market may add at least 25 GW of new capacity in 2012. In North America the market for photo voltaic solar panels has a projected compounded annual growth rate of 42 percent between 2011 and 2015.

Last year was tough for US solar manufacturers. They were forced to reduce prices, decrease margins, close some manufacturing facilities, or even declare bankruptcy. In the 2011 solar market we saw increased manufacturing capacity but we also saw higher silicon supply, lower demand, oversupply and limited credit availability. Perhaps most significantly solar module prices experienced a sharp decline in part due to low cost Chinese PV cell manufacturers.

However, lower module prices have helped reduce the price of solar energy, making solar more competitive with other forms of electricity generation. Today’s manufacturing cost per watt can be as low as US$0.82. These prices can be expected to keep declining particularly as US homeowners are buying solar panels.

The disappearance of the Section 1603 Treasury Grants program at the end of 2011 mean that projects will need tax equity partners. Ernst & Young said that the year ahead will be difficult: “2012 will likely see a significant shortfall of tax equity, and the supply-demand mismatch may limit growth trends in solar and wind development.”

The reality of mainstream global grid parity is getting closer in the solar sector. The declining price of solar has allowed it to grow even in the unsubsidised markets in some emerging economies.

These challenges have not as yet affected overall investment in solar energy. Module prices are expected to further decline over the next five years. This will make solar energy more affordable even in the absence of subsidies.

Regardless of the economic environment, we can expect to see rapid change in renewable energy market and this is particularly true of photo voltaics.

© 2012, Richard Matthews. All rights reserved.

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Renewable Energy in 2012: The Global Economic and Environmental Climate

Since 2009, lower fuel and energy prices created some tough uphill conditions for renewable energy. Despite these powerful headwinds renewable energy installations have increased over the last few years.

On the upside, the Latin American boom should continue to grow in 2012 led by countries like Brazil and Mexico, and new markets will emerge in countries like Kenya, South Africa and Mongolia.

However, the wider economic and political conditions are likely to worsen for renewable energy. One of the most difficult obstacles concerns the impact of the expiration of renewable energy subsidies in the US. Despite efforts from the solar industry, at the end of 2011 the Section 1603 Treasury Grants program came to an end. The wind industry faces a major obstacle with the expiration of the production tax credit (PTC), set for the end of this year.

Subsidies for renewable energy are being cut in the UK's solar and wind energy sectors. US renewable energy subsidies expired at the end of 2011 and Germany is planning to massively cut the Feed-in-Tariffs (FiTs) as of 9 March, 2012. The issue of Japanese FiTs is expected to be addressed by spring.

In the EU, the Eurozone crisis may result in a European recession. If the Eurozone crisis is brought under control, then it will benefit renewable energy markets in 2012, especially offshore.

In China we are seeing evidence of a slowdown and many are calling for major economic reforms. Economic growth in India slowed at the end of 2011.

The hope and promise of the ‘Arab Spring’ has given way to a winter of discontent as regimes in the Arab world are in turmoil.

In 2012, talk of war with Iran and instability in oil rich regions are creating uncertainty and driving up the price of oil. While this may help to create price parity for renewables, it also creates even greater economic pressures on the fragile global economies of nations that are still struggling to emerge from recession.

Amidst all this political and economic uncertainty, global warming continues unabated. NOAA said all 11 years of the 21st century rank among the 13 warmest. And NASA noted 9 of the top 10 warmest years in its record have occurred since 2000.

The La Nina effect was the warmest on record in 2011 according to data from NOAA and NASA. The increasing probality of melting Greenland and Antarctic icecaps are creating real concerns about the future of the planet.

The string of warm years in the last decade is linked to rapidly increasing concentrations of greenhouse gases NASA said. “Higher temperatures today are largely sustained by increased atmospheric concentrations of greenhouse gases, especially carbon dioxide,” NASA wrote in a press release. As the world's economies get stronger, energy demands will keep increasing and carbon emissions will keep rising.

The IEA’s chief economist has said that governments only have five years to avoid more than 2°C of global mean temperature rise.

These factors coalesce to create a troubling outlook. There is both an increased need for renewable energy and a decreased economic and political capacity to meet this need.

© 2012, Richard Matthews. All rights reserved.

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10 Leading Wind Energy Countries

24/7 Wall St. recently reviewed the Global Wind Energy Council’s (GWEC) 2011 ranking of the ten biggest producers of wind power in the world. Wind power keeps growing despite a recession and slow economic growth. According to the GWEC report the world’s wind energy capacity increased by 17.3 percent in 2011.

A relatively small number of leading economic powers are driving wind energy. Nine out of the 10 are among the 12 countries with the largest GDP.

To compile the following list of leading wind energy countries, 24/7 Wall St. used data from the Global Wind Energy Council report, BP’s Statistical Review of World Energy, and GDP data from the World Bank.

10. Portugal

Share of global wind power production: 1.7%
Increase in wind power (2011)/total: 377 MW/4,083 MW
Oil production: N/A
Oil consumption: 0.3 million barrels daily (0.3%)
GDP growth 2010: 1.4%

Portugal has dramatically increased its reliance on clean energy over the past few years. In 2005, 17 percent of the country’s electricity was derived from renewable sources. By 2010, this amount increased to nearly 45 percent. The New York Times reports that wind power, along with hydropower, is now Portugal’s main energy focus.

9. Canada

Share of global wind power production: 2.2%
Increase in wind power (2011)/total:1,267 MW/5,265 MW
Oil production: 3.3 million barrels/day (4.2%)
Oil consumption: 2.3 million barrels daily (2.5%)
GDP growth 2010: 3.2%

Canada increased its total wind power capacity by 24 percent in 2011. The country built 1,267 MW of new wind energy installations in the form of wind towers or wind turbines, effectively quadrupling Canada’s capacity. In 2010 690 MW installations were built.

8. United Kingdom

Share of global wind power production: 2.7%
Increase in wind power (2011)/total: 1,293 MW/6,540 MW
Oil production: 1.3 million barrels/day (1.6%)
Oil consumption: 1.6 million barrels daily (1.8%)
GDP growth 2010: 1.4%

The United Kingdom recently reached a record 6 gigawatts (GW) of wind energy, according to trade association RenewableUK. This is enough to power more than 3.3 million households. Another 19.5 GW are currently planned, and by 2020 over 30 GW are expected to be installed, the group reports.

7. Italy

Share of global wind power production: 2.8%
Increase in wind power (2011)/total: 950 MW/6,747 MW
Oil production: 0.1 million barrels/day (0.1%)
Oil consumption: 1.5 million barrels daily (1.8%)
GDP growth 2010: 1.3%

In 2011, the country increased its wind power capacity by 14 percent. According to the New York Times, more than 800 Italian communities now make more energy than they consume thanks to recent renewable energy plants, largely wind turbines.

6. France

Share of global wind power production: 2.9%
Increase in wind power (2011)/total: 830 MW/6,800 MW
Oil production: N/A
Oil consumption: 1.7 million barrels daily (2.1%)
GDP growth 2010: 1.5%

In 2010 France derived almost three quarters of its power needs from nuclear, now the country is increasing its use of renewable sources like offshore wind energy. According to Reuters, France has plans to meet 23 percent of its energy demand through renewable sources by 2020. The country also plans to double its wind power capacity by 2020.

5. India

Share of global wind power production: 6.7%
Increase in wind power (2011)/total: 3,019 MW/16,084 MW
Oil production: 0.8 million barrels/day (1.0%)
Oil consumption: 3.3 million barrels daily (3.9%)
GDP growth 2010: 8.8%

Wind energy is the fastest growing renewable energy sector in India, according to the Global Wind Energy Council’s 2011 report Indian Wind Energy Outlook. The report also notes that the national action plan on climate change aims to bring India’s total share of renewable energy sources up to 15 percent by 2020.

4. Spain

Share of global wind power production: 9.1%
Increase in wind power (2011)/total: 1,050 MW/21,674 MW
Oil production: N/A
Oil consumption: 1.5 million barrels daily (1.8%)
GDP growth 2010: -0.1%

As of March 2011, wind power has been Spain’s main source of electricity generation. However, spending cuts and political wrangling are threatening Spain's wind industry.

3. Germany

Share of global wind power production: 12.2%
Increase in wind power (2011)/total: 2,086 MW/29,060 MW
Oil production: N/A
Oil consumption: 2.4 million barrels daily (2.9%)
GDP growth 2010: 3.7%

Germany is the world’s third-largest producer of wind power. Germany is also reducing its reliance A decision by the government in the beginning of 2011 to phase out Germany’s nuclear plants has caused demand for wind turbines to soar. According to Bloomberg, “the government has raised subsidies for offshore wind farms as part of a plan to install 10,000 megawatts of sea-based turbines by the end of this decade, up from about 210 megawatts now.”

2. United States

Share of global wind power production: 19.7%
Increase in wind power (2011)/total: 6,810 MW/46,919 MW
Oil production: 7.5 million barrels/day (8.7%)
Oil consumption: 19.1 million barrels daily (21.1%)
GDP growth 2010: 3.0%

In the U.S. wind energy accounted for 2.3 percent of electricity purchased in 2010. Travis Miller, a Chicago-based utility analyst at Morningstar, believes that in wind power is to compete without government incentives, gas prices will have to double.

1. China

Share of global wind power production: 26.3%
Increase in wind power (2011)/total: 18,000 MW/62,733 MW
Oil production: 4.0 million barrels/day (5.2%)
Oil consumption: 9.1 million barrels daily (10.6%)
GDP growth 2010: 10.4%

China has invested heavily in wind energy, in 2011 alone it increased its wind capacity by 29 percent. According to Wang Zhongying, director and research fellow at the Center for Renewable Energy Development of the Energy Research Institute, “Wind power projects are expected to address 17 percent of the power demand in China,” by 2050.

© 2012, Richard Matthews. All rights reserved.

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Although some have reported that the wind industry is "gasping for air," a new report shows that the economic volatility we saw in 2011 did not keep the sector from growing. The dire prognosis for wind power is contradicted by AWEA CEO Denise Bode who said, "American wind energy's long-term fundamentals are strong."

As reported by Info Power, on February 14th, the Global Wind Energy Council's annual market statistics indicate that the wind industry installed just over 41,000 MW of new wind power in 2011, The total installed capacity globally is more than 238,000 MW at the end of last year. This represents an increase of 21 percent, with an increase in the size of the annual global market of just over 6 percent. Today, about 75 countries worldwide have commercial wind power installations, with 22 of them already passing the 1 GW level.

"Despite the state of the global economy, wind power continues to be the renewable generation technology of choice", said Steve Sawyer, GWEC Secretary General. "2011 was a tough year, as will be 2012, but the long term fundamentals of the industry remain very sound. For the second year running, the majority of new installations were outside the OECD, and new markets in Latin America, Africa and Asia are driving market growth."

China

China remains the global market leader with a cumulative capacity of more than 62,000 MW. Li Junfeng, Secretary General of the Chinese Renewable Energy Industry Association (CREIA) said "we expect the industry will grow stronger and more competitive in the next year [2012]."

India

India, added over 3000 MW of wind power installed in 2011 bringing India's total capacity to just over 16,000 MW. D.V. Giri, Chairman of the Indian Wind Turbine Manufacturers Association said, "this is likely to go up to 5000 MW per year by 2015. Ongoing initiatives of the Indian government to create new policies will attract large quantities of private investments to the sector."

European Union

The EU, added 9,616 MW of wind energy capacity in 2011, for a total installed capacity of 93,957 MW. According to the European Wind Energy Association (EWEA), wind power is now able to supply 6.3% of the EU's electricity requirements. "Despite the economic crisis gripping Europe, the wind industry is still installing solid levels of new capacity, commented Justin Wilkes, Policy Director of EWEA."

United States

US wind installations amounted to more than 6800 MW in 2011. As reported in Forbes, the US now has nearly 50,000 megawatts of wind power with another 8,300 megawatts under construction. Denise Bode, CEO of the American Wind Energy Association said "We have installed more than a third of all new American electric generation in recent years and are well on our way to providing 20 percent of America's electricity by 2030. Our 2011 installations alone provide enough electricity to power almost two million American homes."

Canada

Canadian wind energy enjoyed a record year in 2011, surpassing the 5000 MW milestone. Chris Forrest, Vice-President of Communications & Marketing of the Canadian Wind Energy Association said, "Canada, and in particular Ontario, is emerging as a very competitive destination for wind energy investment globally. As Canada continues to renew its electricity generation resources, wind energy will play an ever-increasing part in delivering reliable, economic and clean electricity."

Latin America

Latin America increased its wind capacity by more than 1200 MW, led by Brazil. Brazilian installations were up by half, adding 587 MW to reach a total of just over 1500 MW. According to Pedro Perrelli, Executive Director of the Brazilian Wind Energy Association (ABEEOLICA), "Brazil reached the 1 GW milestone during 2011, and has a pipeline of more than 7,000 MW to be completed before the end of 2016. The Brazilian wind sector has attracted significant investment, facilitated by the policies of the BNDES (Brazilian National Sustainable Development Bank)."

Conclusion

Government policies and government support are important to encourage investors and keep wind power growing. Perhaps the most important thing that can be done to strengthen the long term growth potential of wind power involves putting a global price on carbon.

© 2012, Richard Matthews. All rights reserved.

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