2007: Did We Reach the Tipping Point?
Jan 7, 2008 - Stephen Lacey - renewableenergyaccess.com
|Photo Credit: Todd Spink
At the beginning of each year, as the
renewable energy industry looks back on its progress
over the previous 12 months, the phrase "tipping point"
always seems to enter the discussion. But how will
we know when renewables have truly hit that tipping
Will one quarter of the world's electricity
come from renewable resources? Will more investment
go into clean energy than into the fossil energy industries?
There's no agreed upon standard for how to define
a turning tide, but one thing is certain: 2007 clearly
proved that there is a major change underway in how
the world produces and consumes energy.
"I haven't been calling renewable energy 'alternative'
for years... This is an industry that is proving
itself in markets around the world."
--Michael Liebrich, CEO, New Energy Finance
"If 2007 isn't the tipping point, we
are close to that," says Janet Sawin, Director of
the Energy and Climate Change program at the Worldwatch
Institute in Washington, DC. "This has been a truly
remarkable year, and we're seeing impressive development
According to a REN21 2007 Renewables
Global Status Report due out in February, there are
now 237 gigawatts (GW) of electrical generation capacity
from renewable resources online around the world.
When breaking that total capacity down
among technologies, wind leads with 93 GW of total
installed capacity; small hydro has 73 GW; biomass
has 44 GW; geothermal has 10 GW; and PV has just under
8 GW of total installed capacity. While renewables
still only make up around 5.5% of the world's 4,300
GW of total electrical generation capacity, the REN21
report concludes that the industry "has clearly become
mainstream" over the last decade.
Michael Liebrich, CEO of the analysis
firm New Energy Finance, might hesitate to call renewables
mainstream — but he certainly believes the industry
"I haven't been calling renewable energy
'alternative' for years," he says. "This is an industry
that is proving itself in markets around the world."
According to recently released figures
from New Energy Finance, global public market transactions
for renewable energy totaled approximately $17.5 billion,
global venture capital investment totaled $21 billion,
and liquidity from carbon funds totaled $12 billion
in 2007. REN21 also reports that investment in new
renewable energy capacity totaled $66 billion, up
from $55 billion in 2006.
"If you put that [investment in renewables]
into perspective compared to total energy investment,
it's around 10%. So it's been another strong year
in terms of flows of money into the sector," says
Europe and the U.S. each make up about
45% of that investment, while Asian countries such
as India and China provide the other 10%. Capital
flowing into the industry from Asia — especially China
— is likely to grow more rapidly than in other regions
of the world over the coming years. Some analysts
predict that China could rival Europe or the U.S.
in new development of wind and biomass within the
decade. China is already far ahead of any other country
in solar thermal capacity, accounting for 65% of the
world's installed solar hot water systems.
Last year, China began making changes
to its renewable energy law in order to create a more
attractive business climate for wind and solar manufacturers,
modify feed-in tariffs to encourage growth of the
PV industry, and expand biofuels and renewable electricity
targets. The changes are expected to pass sometime
"In my estimation, 2007 will be looked
upon as the year in which the foundation was laid
from a policy standpoint — and probably also from
an industrial standpoint — for the very rapid development
of China's renewable energy industry," says Lou Schwartz,
President of the consulting and analysis firm China
China admits that it is not pursuing
renewable energy because it is the morally correct
thing to do. The country simply needs as much energy
it can get to meet the various demands associated
with its rapidly growing economy. Domestic sources
such as wind, solar and biomass are a necessary part
of the overall energy picture.
"The Chinese are looking for energy
wherever they can find it. They recognize that renewables
will be a very significant contribution to the total
energy base," says Schwartz.
That attitude, along with the desire
for energy independence, stable energy prices and
the need to address climate change, is what has driven
58 countries to set renewable energy targets and 56
others to create renewable energy "promotion policies,"
ensuring a sixth consecutive year of double digit
growth rates for wind, solar and biofuels, says Sawin.
"I think we're seeing a critical shift
in perception," she says. "While renewables still
only make up a small portion of the total energy mix,
there's certainly a change in how countries are approaching
the industry in relation to other forms of energy."
So while it is difficult — and perhaps
futile — to determine when exactly the tipping point
for the industry may occur, many analysts believe
that 2007 will be viewed as a historic moment when
the world accepted renewables not as "alternative
energy" but simply as energy.