Twin reports released this week, by the United national Environment Program (UNEP) and the Renewable Energy Policy Netword for the 21st Century (REN21), have shown that the transition towards renewable energy continued in 2011. The reports have shown investment has continued to increase, by 17 percent on 2010 levels, to a record US$257 billion.
Solar investment continued to star in 2011, with a 52 percent increase, amounting to US$147 billion. The reports have found that this was driven by booming rooftop photovoltaic installations in Italy and German and smaller-scale photovoltaics in China and the UK.
Echoing figures released by SEMI earlier this week, the U.S. photovoltaic market performed strongly, attracting US$51 billion, an increase of 57 percent on 2010. Indias investment in photovoltaics grew by 62 percent to US$12 billion and in Brazil the increase was 8 percent, to US$7 billion.
Gross investment into renewables also rivaled fossil-fuel fired electric capacity, attracting US$237 billion compared with US$302 billion.
In a statement releasing the reports, Achim Steiner, UNEPs Executive Director said that there is still need for government support, so as not to halt the rise of the renewable sector. "It is essential to continue government policies that support and nurture the sector’s growth, and to de-escalate damaging trade disputes. Otherwise," warned Steiner, "the low-carbon transition could weaken just at the point when exciting cost reductions are starting to transform the economics."
Changes lead to pain
In restrained budgetary conditions for many governments, support programs have been slashed in many important markets for renewable energy, the reports note. Addressing this Udo Steffens, President and CEO of the Frankfurt School of Finance & Management which hosts the UNEP Centre for Climate and Sustainable Energy Finance observed that overcapacity in the photovoltaic market is hurting manufacturers.
"Renewables are starting to have a very consequential impact on energy supply, but we’re also witnessing many classic symptoms of rapid sectoral growth – big successes, painful bankruptcies, international trade disputes and more, said Steffans. This is an important moment for strategic policymaking as winners in the new economy form and solidify."
Similarities with emerging auto industry
Drawing a parallel with auto industry at the turn of the last century, Chairman of REN21 Michael Liebreich, observed that while manufacturers are suffering, "installers, generators and consumers are benefiting."
"In 1903, the U.S. had over 500 car companies, most of which quickly fell by the wayside even as the automobile sector grew into an industrial juggernaut. A century ago, writing off the auto industry based on the failures of weaker firms would have been foolish," remarked Liebreich. "Today, the renewable energy sector is experiencing similar growing pains as the sector consolidates."
The reports also noted retail grid parity arriving at a number of European markets. It also pointed to the increasing internationalization of the renewable-energy industry.