What is the global promise of cleantech?

According to some industry estimates, one-third of the world’s energy will need to come from solar, wind and other renewable resources by the middle of this century to supplement fossil fuel. Companies that work in this space, also known as ‘cleantech’, have made inroads into meeting the world’s rapidly growing energy demands. But as with any emerging industry, these companies face their fair share of growing pains.

There are primarily eight sectors to consider in the renewables space: Wind – 32%, Solar – 29%, Water – 11.9%, Fuels – 8.1%, Storage – 7.8%, Smart Grid – 7.2%, Geothermal – 2.2% and Waste – 1.8%. Today, wind and solar account for two-thirds of the energy from renewables but we also have some fast growing areas like smart grid, for example. Whereas wind is primarily used in Europe, solar is virtually everywhere but it is expensive relative to the alternatives of cheap carbon-based fuels. Also, there is an oversupply of energy producers in market with too many vendors so we should expect to see some consolidation in the years ahead. Wind and solar account for 30% to 40% of the market cap in the US from an investment perspective but several Chinese manufacturers have recently gone public and they now control about half the solar market.

The challenge for renewables is that low natural gas prices set the bar too high for them to jump over. Still, we can expect to see a lot of good innovations like LED  lighting and transportation with bio-fuels, natural gas and electric vehicles come to market rapidly.

What is needed to promote the growth of cleantech is the extension of government-based incentives to advance innovation and ultimately reduce the cost of production. Some of the energy efficiency and renewable energy incentives in place today include:

1. US Department of Energy Loan Guarantee Program to support energy technology development, funding, and new job creation.

2.  2009 American Recovery and Reinvestment Act block grants to allow federal, state and local government to invest in energy efficiency and conservation programs.

3.  US Department of Agriculture’s Rural Energy for America Program to provide grant assistance to ranchers, farmers, and rural-based small businesses.

4. State Clean Energy Funds to support large numbers of renewable energy programs, including biomass, wind, solar, and hydro projects.

5. Utility Rebate Programs to provide customers, including government, nonprofit organizations, commercial businesses, and residential, to receives rebates for the installation of solar photovoltaic systems.

6.  Federal DOE Incentives for Public Sector Organizations to allow state and local governments, municipal utilities, rural elective cooperative, and tribal governments to be paid 1.5 cents per kilowatt hour for the generation of electricity from renewable energy sources.

7.  Federal Investment Tax Credits to decrease income taxes by 30% or all eligible tax-paying owners, businesses and residences, on capital investments made on renewable energy projects.

8.  State Public Benefit Funds to provide financial support through small surcharges on utility bills of customers for solar hot water, photovoltaic, geothermal heat pumps, wind, and farm and landfill gas recovery projects.

9.  Cooperative Research and Development Agreements arranged by the U.S. Department of Energy to create partnerships between a national laboratory and private sector partner to increase research and development into renewable energy and energy efficiency projects.

10. Energy Star Special Offers and Rebates to promote the purchase of energy efficient products by businesses and homeowners. Energy Star sponsors a number of rebate programs and sales tax exemptions on various eligible products.

On August 25th, 2011, posted in: Latest News by admin
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