Venture capital investment in energy technologies — particularly wind, solar and biofuel — jumped to $917 million last year, compared to $716 million in 2004, according to the fifth annual “Clean Energy Trends Report” for 2006, prepared by Clean Edge, a green power consulting firm. Global solar and wind markets increased by 55% and 47%, respectively, to $11.2 billion and $11.8 billion in 2005, the report said.
Overall on a global basis, “clean-energy technologies,” including biofuel, wind, solar, and fuel cell/distributed hydrogen represented a $40 billion market worldwide last year but that market is expected to increase more than fourfold to $167 billion over the next 10 years.
The Clean Edge report acknowledged some growing pains for both solar and wind, but did not seem to think this will slow the continuing increase in private equity investment in the green space.
“There remains turbulence in the clean-energy sector; the solar industry is experiencing growing problems; [It has been] unable to gain access to enough silicon feedstock to keep pace with demand.” This will continue to put upward pressure on pricing over the short term. “Biofuels, while showing great promise, face obstacles, not the least of which is how to quickly ramp up widespread distribution channels.”
In the wind sector, substantial growth could be hurt by the current global increases in steel prices, driven by the same high oil and natural gas prices that increasingly stimulated more demand for alternative energy sources. Finally, the report reiterated that any “mass adoption of fuel cells and hydrogen” remains “decades away.”
As other studies and renewable energy proponents have concluded, Clean Edge’s report said most obstacles will be short-lived, overcome through “a combination of incremental and breakthrough technology developments, the continued scale-up of manufacturing, and smart investments by corporations, investors, and governments.”
Other highlights of 2005, which the report dubbed as the “year of the sun,” included the following:
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