Financial breakthroughs propel solar from alternative energy to mainstream industry


Overall, the clean technology research and consulting firm has identified five clean energy trends in its latest "Clean Energy Trends 2013" report, and provided an overview of the renewable energy systems (RES) market.

In its solar energy market predictions, Clean Edge highlights that it is not just the big investors that are shifting focus toward deployment. Distributed solar financing will also come of age this year, and will be one of the main trends to watch.

In fact, the report authors argue that the near to mid-term will be all about getting assets in the ground. That is where the action will be and it will take many forms, from large corporate investments to crowdfunding, and will span the world, from the U.S. to Japan.

The distributed solar financing trend

U.S. photovoltaic market growth has not only been driven by the falling cost of PV panels, the report claims. It has also been fuelled by third-party ownership or leasing of rooftop PV systems, which has gone from a small niche to more than 50% of the residential and commercial U.S. market in 2012.

Crowdfunding is one recent innovation, with the report referring to Solar Mosaic, a Californian startup, which brought the financing model to the solar industry. Real estate investment trusts (REITs) are also close to being realized.

The report refers to San Francisco-based Renewable Energy Trust Capital, a solar-focused investment firm, which is seeking an Internal Revenue Service ruling to open the REIT structure to solar projects. If this succeeds, the Clean Edge report says, developers could package solar deployments of all sizes as properties that return a low-risk cash annuity stream to investors.

Better established finance systems also continue to drive investment in solar projects. In the U.S. alone, 2012 venture capital investments in clean technologies totaled $5 billion. This was a 26% drop from $6.6 billion in 2011. However, the report says this drop matched a similar downward trend for total venture capital investment in the U.S., with clean technologies investments still representing nearly one-fifth of all venture capital activity during 2012.

Overall, the report states that financial breakthroughs, along with traditional financing systems and continuing price decreases for PV panels, will transform the solar sector from an alternative energy into a mainstream industry.

Opportunities and challenges

Photovoltaic revenues (including modules, system components, and installation) decreased from a record $91.6 billion in 2011 to $79.7 billion in 2012, as continued growth in annual capacity additions was not enough to offset falling PV prices.

However, while total market revenues fell 19% (for the first time in 12 years), cumulative global installations expanded to a record 30.9 GW in 2012, up from 29.6 GW the previous year. Germany remains the top market, having added 7.6 GW in 2012, followed by strong growth in China, Italy, and the U.S. (which now has 7.7 GW of cumulative PV capacity).

Solar power's role in electricity production gains ground rapidly too. While five years ago PV was being installed at roughly $7 per watt, today the report says projects in Germany can be completed at closer to $2 per watt. PV system prices in the U.S. and other countries remain higher.

Recent PV successes happened against a not-so-rosy background. 2012, the report says, was a rather unsettling and difficult year for all types of clean energy. High-profile insolvencies and layoffs plagued many companies, and overall venture investments often retreated.

However, the fundamental global market drivers for clean technology and states' energy needs remain intact. The transition to a renewable energies and natural gas energy scenario dominates, the report says, with some parts of the globe, like the European Union, doing better.

In Europe, solar power is in the driver’s seat, with PV accounting for 37% of all added capacity in 2012. In comparison, wind energy and natural gas contributed 26.5% and 23% of new capacity, respectively.

Clean energy trends

In addition to distributed solar financing, the report highlights four other clean energy trends in 2013: (i) smart devices, which are expected to open a new chapter in energy efficiency; (ii) microhybrid technology, which is said to help with big savings on fuel consumption; (iii) geothermal energy (both in the U.S. and abroad); and (iv) biomimicry – the concept of using designs found in nature as the template for creating modern industrial products and processes.

This last trend particularly has the potential to be applied to clean technologies applications, states Clean Edge, thus making PV technology or wind turbine blades, for instance, more efficient in generating electricity.

Edited by Becky Beetz.

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