Source: LOHAS Weekly Newsletter
Published: Wednesday, November 01, 2000

Between 1998 and 1999, the renewable-energy market in the United States increased from $204 million to $843.4 million, according to a report, “North American Renewable Energy Markets,” by San Antonio-based research firm Frost & Sullivan (www.frost.com). The firm attributes the growth to deregulation of the energy industry—which has opened the door for competition—and to the expected but extended expiration of a federal production tax credit for wind projects. The immediate future will see a slower growth rate, only to pick up again by 2004, the firm says. Of five renewable energies—hydroelectric, wind, solar, biomass and geothermal power—wind power is growing most quickly, Frost & Sullivan reports, but new tax incentives should promote the growth of biopower as well.

Wind power's robust growth is confirmed by the “Global Wind Energy Report” by the American Wind Energy Association (www.awea.org) in Washington, which found that 1999 wind energy capacity increased 36 percent from 1998, making it the fastest-growing energy technology in the world. Energy Secretary Bill Richardson has supported a plan to produce 5 percent of the nation's electricity from wind by the year 2020. Currently, usage is at less than 1 percent. The AWEA report projects that wind-energy can produce 10 percent of the worldwide energy supply by the year 2020.

The three top markets for wind power—Germany, the United States and Spain—contain some 60 percent of worldwide installed wind-energy capacity. Two events propelled the industry's growth in the United States. First, the pending expiration of the wind-energy production tax credit pushed developers to complete projects prior to the deadline. Second, the uncertainty caused by the deregulation of the electric industry caused many utilities to freeze investments in new capacity. During the stall, the wind industry improved technology and cut costs. U.S. leadership in the field is solid—four companies hold a 30 percent world-market share of the manufacture of small wind turbines.

Another established renewable with a promising future is biopower, or biomass, which creates energy by the combustion of vegetation. It can be used to produce electricity, liquid fuels, gaseous fuels and chemicals. Biomass is fueled by waste products from industries such as agriculture, forestry, transportation and construction, according to the U.S. Department of Energy's (DOE) Biopower division.

The United Nations estimated that biomass energy contributed 6.7 percent of the world's total energy consumption in 1990. In the United States, the DOE estimates that the biomass power industry—located mainly in the Northeast, Southeast and West Coast regions—comprises a $15 billion investment and 66,000 jobs.

“Biomass contributes about 4 percent of U.S. energy, but little is spent on biomass research,” says Tom Reed, Ph.D., director of the Biomass Energy Foundation in Golden, Colo. “Finland leads in biopower application, followed by Sweden, Denmark and Norway.”

While less environmentally damaging than traditional energy generated by fossil fuels, “green” energy does not come without an environmental price tag. The environmental considerations of biomass-based power are second only to hydropower, according to Frost & Sullivan analyst Heidi Anderson. Biopower raises concerns about air pollution because fuel sources are combusted to produce electricity. However, new technologies can significantly lower emissions. Overall, biomass fuel combustion can greatly reduce greenhouse gas emissions compared to fossil fuels, Anderson says.

Hydroelectric power has suffered more criticism regarding environmental effects than any other renewable energy. Dams have been blamed for harming fish and adversely affecting water flow and quality. Between 10 and 12 percent of U.S electricity is supplied by hydropower, according to the National Hydropower Association (NHA) in Washington. But the U.S. government has spent comparatively little on hydro-power research over the past 10 years—less than $10 million in DOE funds, compared with more than $1.3 billion for solar, wind and geothermal. NHA predicts a loss of renewable hydroelectric power in the United States unless there are legislative changes to hydropower regulations. Given this uncertain climate, few investors are willing to risk their capital on new hydropower development.

The solar and geothermal industries cause fewer outcries over environmental effects. Solar-equipment manufacturing is a $1 billion-a-year business, growing at a rate of 15 to 20 percent per year since 1992. Geothermal power, according to the Geothermal Energy Association in Washington, produces about $1 billion in annual utility sales in the states of California, Hawaii, Nevada and Utah.

To actively compete with fossil fuel-based power generation, the renewable-energy industry must focus on research and development, concludes the Frost & Sullivan report. It's also crucial for market participants to quickly move promising technologies from the development stage to the marketplace while focusing on marketing and education about the environmental and the social benefits of renewable power, according to Frost & Sullivan.