Wednesday, March 25, 2009

Renewable Distributed Energy Generation Markets To Reach 61 Billion Dollars

This study provides hard statistics for the distributed renewable energy market. This is a sector that is not easy to evaluate and measure, so a resource such as this biennial report is invaluable as it reaches out to the industry and acquires the information.

Otherwise we are left to rely on proponent wishful thinking to evaluate such markets and proxies such as manufacturer’s sales.

The solar sector has become, in spite of a not overly favorable cost profile. Direct subsidy and public policy has helped hugely as it must for the introduction of this type of technology.

This tells us that we now have a huge installed base. That base is about to expand radically with the advent of Nanosolar’s panels which will come in at $1.00 per watt, representing a seventy five plus percent drop in cost.

The importance of the present installed base is that all the peripheral tools and components exist, so that a game changer such as Nanosolar needs to merely deliver.

Renewable Distributed Energy Generation Markets To Reach 61 Billion Dollars

by Staff Writers
Boulder CO (SPX) Mar 20, 2009

Global system revenues for sub-utility scale Renewable Distributed Energy Generation (RDEG) grew at a breakneck pace between 2007 and 2008, rising 76% to an estimated $29.9 billion at the end of 2008, according to a new report from Pike Research.
The cleantech market research firm forecasts that the RDEG market will continue strong growth in the coming years, more than doubling in value to $60.6 billion by 2013.
"Renewable distributed energy generation is a sector dominated by small
solar energy installations," says industry analyst David Link.
Solar represents approximately 98% of the world market, with small wind power and stationary fuel cells each accounting for about 1%, a mix that we expect to remain constant during the next five years."
In each country where RDEG
technologies have established a foothold, the market is heavily reliant upon government subsidies, most often in the form of feed-in tariffs for solar installations. However, says Link, this reliance will subside in the long term as system installed prices come down, and Pike Research forecasts that these costs will decline at a compound annual rate of -6% between 2008 and 2013.
"Dependence on solar energy subsidies will taper off in Europe during the next 3-5 years," comments Link, "though we expect that horizon to be somewhat further in the U.S., approximately 5-10 years away."
Pike Research's study, "Renewable Distributed Energy Generation", provides a comprehensive overview of the opportunities and challenges associated with deploying RDEG technologies, including solar photovoltaics, small wind, and stationary fuel cells, to meet the world's increasing demand for electricity. The report includes an examination of key market drivers over the coming years, analysis of cost factors for each technology, and detailed market forecasts. An Executive Summary of the report is available for free download on the firm's website.

Here is the link to the exec summary:

I have taken the liberty to copy the initial text portion of the summary. The cost of the report is $3500, for those that need it and you well have to register to get the summary in its entirely.


Increasing numbers of countries have committed to reduce greenhouse gas emissions and diversify energy resources to include more renewable sources. The European Union has committed to reduce greenhouse gas emissions by 20% by 2020 compared to 1990 levels, and has even committed to a 30% reduction if global agreement on this target can be reached. Clearly, concerns related to global warming are becoming top of mind for leaders of nations throughout the world.

Meanwhile, the planet has a seemingly insatiable appetite for energy. The world’s electricity generation is expected to increase from 4.2 terawatts (TW) in 1997 to 7 TW by
2030. In addition, the incumbent electricity grid’s centralized power generation model is very inefficient and limited. In most industrialized countries, the overall generation efficiency averages 30-35% by the time electricity reaches the customer and the electricity grid is getting more and more congested. Further, it is estimated that 33% of the global population lives without power today. Extending the electrical grid to reach this customer base is in most cases impractical. Also, with the expanding presence of wireless telecommunications networks to more remote regions of the world, challenges arise as to how to ensure that these networks are properly powered.

One of the ways to answer the challenge of global electricity requirements is with renewable distributed energy generation (RDEG) technologies. RDEG technologies generate power at the point of consumption, avoiding costly and inefficient transmission and distribution. RDEG technologies generate electricity with few if any emissions. They
have the potential to minimize the complications associated with centralized energy sources, giving businesses and consumers more control, agility, and, most importantly, cost savings. However, today the economics of RDEG technologies do not stand on their own. For this reason, governments have stepped in to subsidize their commercial development. Not surprisingly, RDEG technologies are gathering steam in these regions, which tend to be the some of the places with the highest prices for conventional electricity and highest levels of environmental consciousness. Simultaneously, with technological advances and resulting cost reductions, RDEG technologies are generating power at price points that are showing legitimate signs of being competitive with grid- produced electricity. RDEG technologies are comprised of three principal technologies: photovoltaic (PV), small wind, and fuel cells. In breaking down the market, RDEG technologies make up only a fraction of the total electricity generation sources worldwide. In addition, even with impressive growth over the next 20 plus years, the majority of electricity will still be provided by conventional sources such as coal, natural gas, nuclear, and hydroelectric. Of the 4.2 TW of global cumulative electricity generation capacity in 2007, only 4%, or 160 gigawatts (GW), of that total is considered renewable (not counting hydroelectric as renewable). Of the 160 GW of renewable capacity, only 4% is distributed, with the balance being centralized. Even though renewable technologies comprise just 4% of cumulative capacity, they comprise 16% of 168 GW of new capacity additions or approximately 24 GW, and of that only 8% are distributed capacity additions, which is just under 2 GW. Clearly, there would appear to be upside potential for RDEG contribution to the global electricity generation mix.

By far the largest and most important of the three RDEG technologies is distributed PV. The PV industry has experienced rapid growth over the past few years. PV growth has been spearheaded by markets such as Germany, Japan, Spain, and the U.S. Remaining countries in the European Union are starting to pick up strong momentum as well. Emerging markets in India and China show promise in the longer term. Of all the opportunities in PV, the most compelling growth potential lies in decentralized electricity
generation, whether small rooftop or large commercial installations. PV has the advantage of being truly modular, as it can reach cost efficiencies with installations that are just a few kilowatts (kW) to 20 MW or even 200 MW. For the purposes of this report, distributed PV is considered to be those systems less than 20 MW in size, where electricity does not pass through the traditional transmission and distribution system prior to being used. The estimated size of the distributed PV market in 2008 was 3.6 GW, and it is expected to grow to 9.7 GW by 2013, representing a compound annual growth rate (CAGR)% of 22%. This translates into a market with a dollar value of $30B in 2008 that will grow to nearly $60B by 2013, representing a CAGR% of 15%.

Although it is an important part of the solution, small wind is likely to remain a niche technology for the foreseeable future. It is most often used in concert with another energy
source, such as PV, diesel generation, or battery backup power. With the exception of the
U.S. and U.K., small wind has not benefited from strong government subsidies or other support, and even the programs in those countries have been lacking in comparison to what has been extended to PV or large wind installations. However, a surge in demand for small wind in the U.S. is likely as a result of the recently enacted 30% uncapped dollar for dollar tax credit. The estimated size of the small wind market in 2008 was 38 MW, and it is expected to grow to 115 MW by 2013, representing a CAGR% of 25%. This translates into a market with a dollar value of $165M in 2008 that will grow to nearly $412M by 2013, representing a CAGR% of 20%.

Stationary fuel cells offer enormous long-term potential. They offer a clean, efficient source of electricity and range in size from 1 kW up to 10 MW or more. With reformer technology, fuel cells are able to tap into established or accessible sources of fuels such as natural gas, and they can run off of various other fuels including biofuels and gases that are by-products of adjacent industrial processes. With cogeneration or combined heat and power, efficiencies improve dramatically from 40–50% up to as high as 85%. However, cost issues make the technologies’ long-term potential difficult to predict. In order for costs to come down, volumes will have to increase. However, in order for volumes to materialize, costs will need to be reduced substantially. Without uniform government subsidy programs, it is unclear if or when that tipping point may occur. The estimated size of the fuel cell market in 2008 was 38 MW, and it is expected to grow to 219 MW by 2013, representing a CAGR% of 33%. This translates into a market with a dollar value of $242M in 2008 that will grow to nearly $716M by 2013, representing a CAGR% of 24%.

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