Solar Industry Experienced Positive Growth In 2012

Solar Industry Experienced Positive Growth In 2012

The renewable-energy industry has by no means been healthier than now, by the looks of it. In spite that natural gas has become more cost efficient. This year the wind-turbine installation in the U.S. has actually overtaken the installation of new natural-gas capacity. In 2012, new wind capacity had reached 6,519 MW as of Nov. 30, which had just edged out gas capacity and more than doubled new coal installations. Beating out 2011’s numbers, new solar capacity in the U.S. reached nearly 2,000 MW. In 2011, the stock of installed wind and solar power hit 307 GW globally. This was up from 50 GW in 2004, while the total investment in the sector hit $280 billion last year. These are some optimistic numbers.

I apologise; weather metaphors are hard to avoid while talking about wind and solar, but there are clouds on the horizon for renewable. If Congress can’t get its act together to renew the valuable production tax credit next year, the wind industry will face its loss and certainly, some of the growth the industry experienced this year may be due to companies rushing to get their projects in while the credit is still in place. But those capacities figures to compare wind to gas or coal are a bit deceptive because the intermittency of renewable energy means that a megawatt of wind doesn’t deliver the same amount of actual juice as compared to that of a megawatt of gas. The solar industry faces serious global oversupply, which has driven a number of manufacturers in the U.S. and elsewhere into bankruptcy and helped depress the recent IPO of the major panel installer SolarCity. The total investment in wind and solar in 2012 may wel be less compared with 2011, which would be the first time that’s happened in nearly a decade, according to the Financial Times.

Thus what is the actual prediction for wind and solar power’s fate?

That would be dependent on policy, since it always is this way with the power sector, irrespective of whether it’s renewable or not. Extension of the tax credit would be vital for the wind industry in the U.S. Actually, 2.2 cents is paid to the wind-farm owners, for every kilowatt-hour of electricity they produce over a decade. According to a study sponsored by the American Wind Energy Association (AWEA), Bloomberg, New Energy Finance predicts that installations could fall by 88% next year to just 1.5 GW if Congress do not renew the tax credit, at the cost of nearly 40,000 jobs.

In the current political atmosphere, a quick look at the headlines shows how improbable renewal is. The situation is so bad that the AWEA, in an effort to get fiscal conservatives on their side, this month proposed a six-year phase-out of the credit. However, while a bill to renew the credit was passed by the Senate Finance Committee in August and is sponsored by a Republican, Senator Chuck Grassley of wind-rich Iowa, little has happened since, and producers are getting ready for the fallout. Already turbine makers have announced hundreds of layoffs.

As for the solar industry, the low costs for modules that have driven installation are a double-edged sword for manufacturers. They increasingly can’t make money off their products at existing prices. This has also led to a bit of a trade war. The US and Europe have charged Chinese solar manufacturers, with ample help from Beijing, of selling solar modules at below cost. An antidumping investigation was opened up in September by the E.U., and the U.S. slapped tariffs on Chinese’s solar panels. A trade war would likely hold back global growth of solar power in spite this being good for domestic manufacturers.

There is hope for good news nonetheless. Wind and solar are becoming more competitive against fossil fuels. Solar modules cost 75% less than they did four years ago, whereas the cost of wind turbines has fallen by 25% over the past three years. And that’s not just due to government help. Technological developments have continued to bring down the cost of renewable energy, and grid equality has already been achieved in some regions. It’s imperative to remember that ten years ago renewable energy was merely a hobby. We’ve come a long way.

At the end of the day, that’s why I’m quite hopeful about the immediate and long-term future of renewable energy. There’s still a huge market out there for new electricity generation, particularly in untapped markets like Latin America and the Middle East. Renewable power is a tremendous opportunity. The ever sunny Saudi Arabia, for its part, has said it needs more than $100 billion in renewables, while Japan and Germany need renewables to substitute its rejected nuclear power. Like the scaffolding that surrounds a rocket at lift-off, the need for supportive public policy will fall away as wind and solar improves. Even though the year 2013 may not be as good for renewables as 2012, since a lot will depend on how the larger global economy fares, but rest assured, we won’t be going backward.

Source: Science Time

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RPN's contributed to this report.

Professional freelancer in Green Technology and Scientific Development. Educational background in the field of Human Resources Management.

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