— Increasingly commercial, renewable energy is gradually becoming a part of the industry’s overall planning process and could represent a $270 billion investment by 2010, says a study set for release Monday.
The industry is moving away from a project-by-project basis and into output planning within an integrated strategy, UK energy analysts Douglas-Westwood Associates said. The supply of commercial off-the-shelf equipment has been one of the key fundamentals in the reducing cost of renewable energy. Study team leader Will Rowley noted many equipment suppliers now view the industry not as some special niche but as another business sector.
“This step change in attitude also means that much of the technological advance is now coming from industrial research and development rather than academia. It is the engineers that are now bringing commercial reality into the world of renewable energy,” he said.
The study forecasts continued investment through 2004, followed by a flat period while a reappraisal of the cost of “green” electricity and a reduction in the renewable energy market’s ability to command premium prices causes a temporary slow down.
Investment is expected to pick up again toward the end of the decade, because of rising demand for electricity in Asia, particularly China, analysts said. They explained the period 2001-2005 could be characterized as environmentally driven, while the period 2005-2010 will be energy demand driven.
Wind, biomass to lead
Wind and biomass are forecast to capture the most significant share of expenditures. With a combined investment of more than $190.5 billion in 2001-2010, Douglas-Westwood said these two sectors are forecast to represent more than 70% of industry spending.
Germany leads the world in the number of wind projects with more than 8,000 wind turbines with 60,000 Mw of installed capacity. With nearly 6,500 Mw on the drawing board in the Netherlands, UK, Germany, and Denmark, offshore wind power could become the fastest growing segment of the wind market, analysts said.
There is currently about 80 Mw of installed capacity offshore, all in Europe with Denmark responsible for 63% and the Netherlands, 16%. The analysts warned, however, wind power is subject to numerous variables that affect its economics. Grid connection is a particular problem because some of the world�s best prospective sites are a considerable distance from existing transmission grids, they noted.
Biomass-burning plants have been installed across the world burning a wide range of renewable fuels. India has a national program of small 5 Mw plants, the authors said. Plants in the US are burning wood processing residue and in the UK straw and poultry litter.
Geothermal energy and small hydro projects also represent potential growth markets. Installed geothermal facilities total 1,900 Mw each in China and the US and 1,400 Mw in Iceland. While large-scale hydro is considered a mature industry, the analysts said hydro facilities of under 10 Mw have grown over the past decade to become a $2 billion /year industry. New financial incentives are leading to increased interest and activity around the world.